Uplink ALPA - The Voice of Aviation

The New Zealand Air Line Pilots' Association Newsletter. As of April 2020 Uplink ALPA is a 6-monthly publication.

Risky business? – NZ’s general aviation employment contracting

As reported on in several issues of Uplink this year, the advent of ‘atypical’ employment models are becoming increasingly used in the global aviation sector, particularly as increased competition, lower fares and more people flying than ever before puts pressure on airlines to reduce costs, including those of its human resources. 

In New Zealand however, with one of the world’s largest numbers per capita of helicopter ownership along with smaller fixed-wing operators, contracting as an ‘atypical employment model’ has become increasingly common, particularly for smaller general aviation businesses. 

This has led to fears that New Zealand’s general aviation industry is developing a culture of unfair employment practices, putting the welfare of its local workers and the industry’s international reputation at risk. 

Atypical employment models may also put safety at risk as workers engaged under atypical contracts can be reluctant to voice safety concerns and issues such as fatigue, which could impact their ongoing engagement with the company, NZALPA’s advocate Tom Buckley said.

In other sectors, New Zealand businesses have operated for some time using contractors, but it is factors like our unique and challenging terrain, coupled with the technical and public safety aspects of aviation where contracting models present added risk for both general aviation workers and their employers.   

It also brings up a number of issues regarding fairness and the general welfare of New Zealand’s newly trained and young aviators.

Buckley who works with general aviation members, and often with their potential place of work, on employment contracts is particularly concerned about this.   

“As a wider part of the ‘atypical employment model’ movement that we’re increasingly seeing with airlines offshore, one of our biggest concerns in New Zealand is what effectively are self-employment contracts being  offered to many of our newly-trained and least experienced pilots,”  Buckley said. 

“Aviation is one of the world’s most safety-centric professions and flight training is increasingly expensive. But unlike medicine, for example, a graduate pilot can expect to earn little in their first or second job where the emphasis needs to be gaining valuable experience and paying off debt 

“Competition for jobs is also generally high and where jobs are offered, they are increasingly encountering contracting deals where they feel they have no choice but to take what’s on offer.  

“Young or new pilots are becoming some of New Zealand’s most vulnerable workers”, Buckley said. 

While acknowledging that there can be some benefits to engagement as an independent contractor such as tax breaks, NZALPA advocate Adam Nicholson said there are significant advantages to being an employee.   

Nicholson notes that independent contractor tax advantages can also have a down side such as if tax is incorrectly calculated then IRD will seek recovery and penalty.  He has also encountered situations where the tax is calculated for a graduate pilot on contract who has then incurred considerable accounting costs in relation to his actual take home pay. 

In contrast, Nicholson points out, employees have significant protections and benefits as follows:

  • A minimum four weeks paid annual leave under the Holidays Act 2003 (8%);
  • A minimum five days paid sick leave per annum under the Holidays Act 2003 (2%);
  • A minimum paid bereavement leave up to three days per annum under the Holidays Act 2003;
  • Eleven paid statutory holidays under the Holidays Act 2003 (+/- 4%) and where public holidays are worked, an employee is to be paid minimum time and a half for hours worked together with an alternative holiday to be taken at a different time under the Holidays Act 2003;
  • Tax paid at source by the employer under PAYE;
  • Personal grievance, compliance, penalty, and other minimum entitlements provided under the Employment Relations Act 2000, in a specialist employment jurisdiction under the Employment Relations Act 2000 which, in addition to other things, provides access to free mediation and affordable dispute resolution processes in the Employment Relations Authority and Employment Court; and
  • Superannuation in compliance with Kiwisaver legislation (at least 3%).

Most importantly, as an employee there is a guaranteed base pay under the Minimum Wage Act 1983, together with protections under that Act concerning deductions, methods of payment etc.

“We’ve been in situations where we’ve had to explain to an employer that the minimum wage isn’t designed to be ‘aspirational’,” said Nicholson. 

Benefits available to employees are also enhanced by membership with NZALPA, where protections and specialist services, including insurances, are available solely to employees.

Alternatively, said Nicholson, on a rough calculation income on an independent contract basis needs to be at least in excess of 17% higher than the rate paid to employees for a similar job.

As for aviation businesses seeking to employ workers on contract, particularly graduates and those new to the industry, Nicholson’s advice is simple:

“Treat prospective staff, especially young pilots, like you would hope others would treat your own son or daughter.  Pay them a living wage, support them as best you can and make sure their experience with you is a positive and safe one

“This is not only good for your workers, its good for your business and the reputation of New Zealand’s aviation industry as a whole – a fair place to fly and work,” Nicholson said.

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