Leased Executives Undeterred By ERB

Executive leasing now plays signifi-
cant role that will continue to grow, according to many of this country’s leading employment agencies.
The bill, which is now before government select committee, has generated much confusion over its classification of an employee and an independent contractor. As it stands, in deciding whether is an employee of B, primary consideration is the extent to which is subject to B’s control and integrated into B’s business.
Executive leasing is used throughout the business strata – from small companies to huge corporations – and from general management roles to very specialist positions. There is growing number of top ranking Kiwi executives who now prefer the flexibility of working on contract. Many are concerned this bill could ruin their careers.
Several lobby groups from the employment industry as well as individual businesses have made submissions to the select committee. They are all optimistic that appropriate amendments will be made to the bill. When Finance Minister Michael Cullen spoke to the Manufacturers Association in Auckland recently, he foreshadowed changes to wipe the “negative side-effects” of the bill. Genuine independent contractors should rest easy with Cullen’s assurance they would not be forced to become employees.
The bill was badly drafted and never intended to strike at this particular sector of employment, according to Laurie Bunting, manager of executive leasing for the Auckland branch of Morgan & Banks. “The bill in its present form would not only damage the leasing principle, but encourage executives to leave for Australia or elsewhere,” he says.
Bunting believes that the bill will revert back to series of common law tests to determine if people are classified as employees or independent contractors. “The feedback coming back to us is good – as an individual company and as an industry – regarding our concerns. There was no intention that this [confusion over employee/contractor status] should happen.”
In the five years he has worked with executive leasing, he has watched it grow “quite considerably across all disciplines” and leap from the core business of accounting, finance and IT into more senior management roles. “As an international trend, it is growing faster than the permanent market – it is all part of the increasing globalisation and mobility of individuals.”
The South Island executive leasing manager for Morgan & Banks, Gerald Van Looy, echoes Bunting’s views. “International marketing forces have created the great growth of executive leasing in this country as more organisations identify the need to be as flexible as possible in the global playing field.”
Also confident that the bill will be altered, Van Looy, believes it is “too open-ended” as it stands. The potential downside of the bill in its original form could be significant loss of intellectual capital from this country.
Other than the changes to the definition of fixed term, the bill will have little or no impact on the executive leasing market, according to Shaun Bowler, the principal consultant of executive resources with KPMG in Auckland.
In the last five years KPMG has successfully launched executive leasing, or ?interim management’ operations in Auckland, Wellington, Tauranga, Sydney, Perth, Adelaide and Melbourne. “We’ve got 50 specialist recruitment and selection consultants in Australasia and good percentage of those focus purely on executive leasing.”
Bowler sees the bill’s emphasis on mediation as opposed to arbitration and possible reshape of the definition of fixed term as positive points. “We are aware that some employers and recruitment agencies have been using and promoting contractors recently to bypass the normal employment relationship – ?try before you buy’.
“We believe that is the wrong way to use an interim and it is interesting that the bill will likely tighten up on that misuse by more clearly defining what is fixed term.
“People in this industry have been claiming that leasing will decline as result of the Employment Relations Bill, but we don’t see it necessarily that way. The days when government policy dictated business success or failure ended in New Zealand in the late 1980s,” Bowler adds.
“There is huge expectation out there that logic will prevail and it will be business as normal,” Paul Dexter says. director of Management Recruiters, he heads the company’s busy executive leasing section.
Many business organisations will be forced to totally revamp their business plans if the bill is passed in its current shape,” he says. “At the moment there is an uncertainty surrounding it, but if the status quo remains we are in for knee-jerk reaction.”
A major component of the company’s business, executive leasing has become “virtually common-place” throughout the corporate market place, according to Dexter. Their leasing scheme is now including Australian executive posts as the company has recently become part of the Australasian company, Recruiters Australia. With the introduction of GST in Australia, trans-Tasman leasing is becoming steady business.
The manager of executive leasing for OCG Consulting, Sharon Ward Duncan, also cited the demand for New Zealand expertise in Australia during the recent implementation of GST as an example of the tremendous potential for growth in the executive leasing sector – on the local and international scene. She does not believe the bill will stymie its popularity.
“Executive leasing shows the highest growth and is the most substantial part of our business.” Leasing has gone far beyond its earlier parameters of accounting and finance, moving out right across the disciplines. “It is one of the many components of the casualisation of the workplace – trend which will continue.”
She believes the bill cannot hamper the trend towards executive leasing, as changes will be made. “In its current form, there is uncertainty for all parties – the definition of employee is too broad.” And even if the bill is passed in its current shape, Ward Duncan cannot foresee the demise of executive leasing. “Either way executive leasing is going to grow.”
The Auckland manager of Clayton Ford, Rachelle Rodgers, has seen “phenomenal growth” in the field of executive leasing. When the company was established in Auckland two and half years ago, it opened with staff of four – which now numbers 15.
With the “leaner companies of the ’90s”, executive leasing has provided more flexible workforce, according to Rodgers. She predicts the strong future growth in this market will be worldwide with greater access to specialist and project skills through the Internet.
Rodgers says it is too soon to gauge the effects of the bill. “The market is apprehensive and this is having an effect now. We believe that the bill will be amended and that although there may be some tightening of the criteria, the executive leasing market will continue to thrive in New Zealand.”
Along with several other employment consultants, Rodgers sees the potential of the bill to foster significant growth in the leasing market. This could happen, she says “as companies seek to distance themselves from direct contractors, preferring instead to rely on the expertise of consultancies to manage and maintain the relationships with their flexible staff”.
Many consultants agreed the uncertainty around the bill was actually boosting the business of executive leasing. As Kevin Chappell, managing director of Auckland’s Executive Task Force, says “it is viable option in these uncertain times”. He sees executive leasing as growing force – especially “as the model of commerce keeps changing”.
“Executive leasing is the way of employment of the future,” according to Bede Ashby, director of Momentum Consulting in Wellington – major player in the capital’s executive leasing market. He handles the company’s leasing portfolio, which