A group of elite athletes, spearheaded by top cyclists and rowers, is taking High Performance Sport NZ to the Employment Relations Authority to seek a declaration that they are employees.  Over the past few weeks there has been a lot written about why they are doing this, with the focus being on the inequality of bargaining power that exists within the relationship and the fact that most professional athletes are not paid even the minimum wage.

What has not been talked about so much is what this will actually mean in practice and in law.

By way of explanation, the legal distinction between an employee and an independent contractor depends on the application of certain tests to determine the “real nature of the relationship”.  When this case goes to the authority in February next year, it will consider the intention of the parties, and then the “control”, “integration” and “fundamental” tests.

In terms of “control”, an employee can expect to be subject to far greater control and supervision by their employer, than an independent contractor would.  This includes when and where the employee works, when they are required to perform their work, and compliance with policies and procedures.

What this would mean for professional athletes is that their employing agency could dictate what they do and when, including potentially what they eat, when and for how long they train, what equipment they use, what their percentage body fat should be, what they wear and when they can take leave. 

An employer could determine who the athlete “reports” to, so in practical terms who will coach them and overview their employment arrangements. They could also require compliance with social media and media policies, meaning that the ability of athletes to express personal views through these fora would likely be more limited.

In seeking to be declared “employees”, the athletes will likely argue that they are already subject to many of these controls, but they will need to be prepared for a greater level of direction than may currently exist.

The second test relates to the extent to which the person is “integrated” into the operations of the agency.  In this instance High Performance Sport NZ works with other National Sporting Organisations, including Cycling NZ and Rowing NZ, to create conditions for optimal performance by athletes.  Essentially it exists for the purpose of supporting its partner agencies and their athletes to excel on the world stage.  Given this, it should not be difficult for the athletes to demonstrate that they are an integral part of the operations and business of High Performance Sport NZ or the relevant National Sporting Organisation.

The application of the “fundamental” test is potentially less clear.  This involves consideration of whether the person is in business in their own account.  At a basic level, an employee works for their employer to enable the employer’s interests to be met, whereas an independent contractor might be regarded as an entrepreneur, providing their labour in the pursuit of their own entrepreneurial objectives.

In the case of professional athletes, their success serves the purposes and objectives of High Performance Sport NZ and/or the relevant National Sporting Organisation, but it also serves their own purpose and ambition. There is a real question in this regard as to whether they are primarily fulfilling their own interests or that of the agency. 

Further, many professional athletes have business interests which sit outside of their training and performance, but which are based on the profile created as a result.  In particular sponsorships, media opportunities, and business partnerships which are founded on the athlete’s reputation and profile are generally self-generated and are no managed or controlled by High Performance Sport NZ.  However in seeking to become employees, the athletes may find that their freedom to pursue these outside work opportunities is more restricted, or at least that their employer will have a greater say over what they can do, and who they can do it with, in this space.

The assessment of whether a person is an employee or contractor for employment law purposes is not straight forward. Nor are the consequences.  Whilst the athletes may achieve better pay and conditions as a result of being deemed to be employees, they may need to be prepared to give up some independence and freedoms. 

There will also be a far greater level of complexity around how and when the agency can dismiss or stand athletes down.  In an employment relationship, this requires good cause, natural justice and a proper process going beyond unilateral selection decisions.  This will create a whole new paradigm for the existing relationship between athletes and their employing agency, and open up the floodgates to further legal challenges.