Download pdf - Process Document Final Version 2006

7/30/2019 Process Document Final Version 2006

1/59

University of Otago

Compliant Contractor Process Documentation

COMPLIANT CONTRACTOR

PROCEDURE DOCUMENT

Dec 2006 1


2/59

University of Otago


SECTION 1: POLICY STATEMENT.............. .............. ............... .............. .............. ............. ...... ..... ...... ...3

1.1 AIM.........................................................................................................................................................4

1.2 COMPLIANT CONTRACTORS POLICY DOCUMENT...................................................................................5

SECTION 2: LEGAL REQUIREMENTS...................................................................................................8

HSE AMENDMENT 2002...........................................................................................................................10

SECTION 25:...............................................................................................................................................10

IF THERE OCCURS ANY SERIOUS HARM OR ACCIDENT, THE EMPLOYER, SELF-

EMPLOYED PERSON OR PRINCIPAL CONCERNED MUST, -.......................................................10

(A)AS SOON AS POSSIBLE AFTER THE OCCURRENCE BECOMES KNOWN TO THE

EMPLOYER, SELF-EMPLOYED PERSON OR PRINCIPAL, NOTIFY THE DEPARTMENT OF

LABOUR OF THE OCCURRENCE AND................................................................................................10

(B) WITHIN 7 DAYS AFTER THE OCCURRENCE GIVE THE DEPARTMENT WRITTENNOTICE, IN THE PRESCRIBED MANNER...........................................................................................10

SECTION 3: TYPES OF CONTRACTS...................................................................................................11

3.1 MAJORPROJECTCONTRACTS. .............................................................................................................11

3.2 REGULARCONTRACTORS......................................................................................................................13

3.3 COMPLIANT CONTRACTORPROCESS ....................................................................................................13

3.4.1 CONTRACTORTYPE.........................................................................................................................14

3.5 CONTRACTOR........................................................................................................................................18

3.6 SELF EMPLOYED CONTRACTOR............................................................................................................19

3.7 Material, Goods Supply and Delivery Contractors and Site Visitors.. ..........................................20

SECTION 5: UNIVERSITY CONTRACTOR INDUCTION..................................................................24

SECTION 6: IDENTIFICATION CARDS................................................................................................24

SECTION 7: COMPLIANT CONTRACTOR AUDITING.....................................................................25

APPENDIX 3: CONTRACTOR TYPE ASSESSMENT FORM.............................................................37

COMPLIANT CONTRACTORMONITORING CHECKLIST................................................................................39

Appendix 4 : Self Employed Contractor Letter......................................................................................42

CONSULTANT LETTER.................................................................................................................................44

RE: CONTRACTORHEALTHANDSAFETY CONTROL................................................................................44

CONSULTANT CONTRACTOR......................................................................................................................45

COMPANY : .....................................................................................................................................45

ADDRESS: ............................................................................................................................45

CONTACTPERSON : ..........................................................................................................................45WORKPHONE : CELL PHONE: .........................................................................................................45TYPEOF WORKUNDERTAKEN: .....................................................................45

TRAININGAND/OREXPERTISETOUNDERTAKEWORK(FOREACHEMPLOYEE)

....................................................................................................................................................................45

SAFETY PRECAUTIONS/HAZARDMANAGEMENT:

....................................................................................................................................................................45

SIGNED BY : DATE: .........................................................................................................................45

POSITION: ......................................................................................................................................46

APPENDIX 4: MATERIALAND GOODS SUPPLY & DELIVERY, AND SITE VISITORLETTER..........................47

Dec 2006 2


3/59

University of Otago


Appendix 4 : Contractor Letter.............................................................................................................48

APPENDIX PRE-COMPLIANT CONTRACTORLETTER...................................................................................55

4.3 NON-RESPONSETO INITIAL CONTRACTORLETTER..............................................................................56

NON-RESPONSETO INITIAL CONTRACTORLETTER...................................................................................57

4.4 ADDITIONAL INFORMATION REQUEST LETTER.....................................................................................584.5 COMPLIANT CONTRACTORACCEPTANCE LETTER................................................................................59

APPENDIX 4: CONTRACTORS LETTERS

APPENDIX 5: ASSESSMENT OF HEALTH&SAFETY Information letters ..

Section 1: Policy Statement

The University of Otago recognises its responsibility to establish a clear

and appropriate standard of Health and Safety performance for its

contractors. This document outlines the system which is in place to

ensure that this standard is met. Essentially the system is an

information swapping exercise so that all parties involved can work

safely. University of Otago believes that good safety management is

good business and wishes to deal with contractors who we are

confident will work for the University in a safe manner.

As a baseline all compliant contractors must comply with the

requirements of the Health and Safety in Employment Act 1992 and

related legislation however the University of Otago wishes to

encourage all contractors to be committed to effective management of

Dec 2006 3


4/59

University of Otago


Health and Safety. This is seen as a joint responsibility and by the

application of this procedure it is hoped that there will be an improved

relationship with contractors.

1.1 AimThe aims of this procedure are to ensure that there is:

Clear Expectations placed on contractors

An even playing field so that contractors who are budgeting for

safety measures in their tender price are not undercut by

contractors working in an unsafe manner.

a system to ensure that this procedure is effective by monitoringcontractor performance

Dec 2006 4


5/59

University of Otago


1.2 Compliant Contractors Policy Document

Purpose The University of Otago recognises theresponsibility as a Principal to establishclear and appropriate standards ofHealth and Safety performance forcontractors on site. As a principal, theUniversity of Otago has an establishedCompliant Contractor process to ensurethe health and safety of staff, studentsand visitors to the University will not beharmed by contractors, or their sub-contractors while on site. The CompliantContractors process will also minimisethe likelihood of harm to contractors andsubcontractors while on University sites.

Scope All University of Otago workplaces.

Associated Documentation

Legislative Health and Safety in EmploymentAct 1992Health and Safety in Employment

Amendment Act 2002University Health and Safety PolicyCompliant Contractor ProcessDocumentUniversity Health and SafetyManual

Additional ACC Partnership Programme

Dec 2006 5

COMPLIANT CONTRACTORS

HEALTH AND SAFETY POLICY


6/59


7/59

University of Otago


this is met through employeeinduction.

Dec 2006 7


8/59


9/59

University of Otago


practical steps to prevent harm to the contractor from the laboratory

hazards.

Section 17 -

Relates to the duties of self-employed, and

Section 19

Relates to the duties of employees. Both sections require the self-

employed and employees to take all practical steps to ensure that no

action or inaction of theirs while at work harms them or any other

person.

The University of Otago has the 'Duty of Principal' as outlined in

section 18:

Section 18:

Duties of Principals - (1) Every principal shall take all practicable

steps to ensure that -

I. No employee of a contractor or subcontractor ; and

II. If an individual, no contractor or subcontractor, -

is harmed while doing any work (other than residential) that the

contractor was engaged to do.

(2) Subsection (1) of this section shall be read subject to section 2 (2)

of this Act.

The case law example Central Cranes Ltd. Vs Department of Labour

1997 is provided in appendix 1 as an example of section 18

application.

Dec 2006 9


10/59

University of Otago


HSE Amendment 2002

Section 25:

If there occurs any serious harm or accident, the employer, self-employed person or principalconcerned must, -

(a) as soon as possible after the occurrence becomes known to the employer, self-employedperson or principal, notify the Department of Labour of the occurrence and

(b) within 7 days after the occurrence give the Department written notice, in the prescribedmanner.

Dec 2006 10


11/59


12/59

University of Otago


a part of the process to review contractor performance for future

reference. Property Services should be consulted should this type of

contract be required for any department, so that the due processes are

included. The process for managing major contracts is not included in

this document.

Dec 2006 12


13/59

University of Otago


3.2 Regular Contractors.

Minor or on going contracts are where companies are regularly used

for short-term contracts, continuous contracts for routine work, and

contracts where the hazards are well-defined and standard control

measures apply. The University has a significant number of such

contractors, and this document defines the contractor controls to

manage these contractors.

3.3 Compliant Contractor Process

The Complaint Contractor Process (CCP) is a system where regular

contractors are assessed for health and safety compliance, and

provided with an induction session on the University requirements for

contractors on site. The compliant contractor will then be issued with

an identification card to be carried on site at all times. Compliant

contractors will be maintained on a University of Otago database newcontractors can be added at anytime. An auditing system of reviewing

the continuing compliance of contractors will be implemented, every

two years and new cards issued.

The steps involved are:

1. Identifying the contractor type and requesting relevant health and

safety information

2. Assessing the information for contractor compliance either

satisfactory or further information requested.

3. Contractor induction completed

4. Contractor identification supplied

5. Monitoring and review

Dec 2006 13


14/59

University of Otago


3.4.1 Contractor Type

The contractual relationships and levels of control vary significantly

within the University environment. The University has drawn up a list

of frequently used contractors, and contractor groups have been

identified with the various health and safety responsibilities defined,

based on past experience. The University CCP system defines the

nature and type of contract, the letter indicating the type of contract

and the requirements for compliance, and the means of assessing a

contractor. If a contractor does not agree with the contractor

classification, then this can be reviewed on request.

The defined contractor groups are:

Group 1 - CompaniesDescription: Limited liability trading entities

a. Material and Goods Supplier deliver on siteb. Services (i.e. carry out job work)c. Consultants (employed by an entity)

University relationship: Order and supply

Group 2 - Self employedDescription: Non limited liability entities: partnerships, sole traders

Supply a service (i.e. carry out job work)a. Job Work (order based) charge for materials and labour (set

hourly rate)b. Labour only (University supplies materials)c. Consultantsd. Specialists

Dec 2006 14


15/59

University of Otago


e. Guest or Visiting Academics

University relationship: Contract for Services

Group 3 - Other

Employment Agency short term (resource shortage situations)VolunteersProctor Students

Risk Groups:

High Risk Laboratory work

Use of hazardous substances

Construction work

Any hot work, confined space or height work.

Boat work

Diving work

Fieldwork

Driving University Vehicles

Work in any restricted environmentLow Risk Office work

Lecturing in lecture theatres

Induction requirements based on contractor type andrisk group:

Relationshi

p

Compliance Level of

inductionrequirement

Risk

Group One-Companies-Material &GoodsDelivery

Universitypurchaseorder

Escorted Pamphlet Low

Dec 2006 15


16/59

University of Otago


-Services(carry out jobwork)

Universitypurchaseorder

Compliant Full High

-Consultants Universitypurchase

order orContract forService

Complaint FullInduction or

employeeinduction(asappropriate)

High orLow

Group Two SelfEmployedJob Work(order based set hourlyrate)

Charge formaterials andlabour

Contract forServices

Compliant Full High

Labour only(Universitysuppliesmaterials)


Compliant Full High

Consultants Contract forServices

Compliant FullInduction oremployee

induction(asappropriate)

High orLow

Specialists Contract forServices

Treat asemployees

FullInduction oremployeeinduction(asappropriate)

High orLow

Guest orVisiting

Academics


Treat asemployees

Employeeinduction

Low

Group ThreeOtherEmploymentAgency staff


Complaint Employeeinduction

High orLow

Dec 2006 16


17/59

University of Otago


Volunteers Visitors Treat asemployees

Employeeinduction

Low

ProctorStudents

Visitors Treat asemployees

Employeeinduction

Low

Dec 2006

Need for a contractor

Will the work involve either alterations or

additions to any part of the premises (PSSLA

12.1) or be part of a service contract relatingto the premises (PSSLA6.2)

Yes

Refer to Property Services relevantFacilities Manager

No

Is a suitable approved

contractor available?

(Check web page lists)

No

Arrange Contractas per guidelines

Yes

Contact H&S officeto initiate approval

process

Identify the type of contractor

High RiskLow risk

Arrange

induction or

provision ofinformation

as appropriate

Arrange Contract

as per guidelines

Property Services Contractor

Approval Processes.

Property Services Database

17


18/59

University of Otago


3.5 Contractor

A contractor is where work is being performed for gain or reward falls

into section 18 of the HSE Act, and a principal/contractor relationship

exists. In this situation, the contractor clearly operates as an

independent business and has duties as an employer under the HSE

Act.

All work conducted by contractors in this group must ensure safety foremployees and students, as well as the contractor and his/her

employees. The legally prescribed health and safety standards must

be complied with by the contractor and contract-specific health and

safety standards may need to be identified for management. The

University has a duty to set a clear standard of required Health and

Safety performance.

The key factors when assessing contractor Health and Safety

performance will be to look for evidence of:

Management commitment;

Employee involvement;

Performance monitoring;

Hazard management;

Staff training.

A contractor may provide evidence of current ACC Workplace Safety

Management Practice/ACC Partnership Programme Certification which

is accepted as meeting the University of Otago health and safety

requirements.

For the University of Otago to assess the compliance standard the

Dec 2006 18


19/59


20/59

University of Otago


3.7 Material, Goods Supply and Delivery Contractors and Site Visitors. .

Material, Goods Supply and Delivery Contractors and Site Visitors companies may

access University of Otago work sites for the delivery of goods and materials and are

treated as site visitors. They should report on arrival to the University contact person and

be supervised for the first visit. Repeat visits can then be unsupervised.

The University of Otago has a standard health & safety pamphlet for Material, Goods

Supply & Delivery Contractors & Site Visitors.

The information in this pamphlet is to assist material, goods supply and delivery

contractors, site visitors and the University of Otago to comply with the Contractor

requirements, as stated in the Health & Safety Legislation, as well as assisting with any

health & safety issues encountered while on campus.

The current pamphlet can be viewed on www.otago.ac.nz/healthandsafety

3.8 Consultant Contractors

Consultant Contractors may undertake hazardous work however it is ina limited and clearly defined scope.

Consultants are the group comprising of companies that are providing

the expertise to the University of Otago. If the person operates as a

sole operator they should be dealt with as a self employed category.

The consultant must be retained for his/her expertise rather than

undertaking any physical work. While this group will generally pose a

low level of risk if they are undertaking hazardous work they must

provide full health and safety information prior to commencing work.

It must be made clear to this group that the University of Otago only

requires health and safety information relating to the work being

Dec 2006 20
http://www.otago.ac.nz/healthandsafetyhttp://www.otago.ac.nz/healthandsafety


21/59

University of Otago


undertaken. There is no need for instance to have information on how

they manage their own office hazards.

Section 4: Assessment of Health and SafetyInformation

The University health and safety team will assess the information

requested for compliance using the Compliance checklist.

Contractor Assessment Process

Notes:

The contractor assessment process is designed to ensure that

contractors on University sites have health and safety requirements in

place. It is not a full audit of the detail of contractors health and safe

systems. For example, a Contractor is required under the HSE

legislation to have hazard identification and control process. As a

principal, we need to ensure that the contractor complies with thisrequirement. As the nature of the work of our contractors should be

known within Property Services, we would look for specific known

hazards and suitable controls e.g.: hot work, height work, confined

space. Likewise with injury reporting, a system of reporting needs to

be in place, however we do not need to view all the injury reports.

Self employed persons are required under section 17 of the HSE Act to

take all practical steps to ensure that no action or inaction of the self-

employed person while at work harms themselves or any other person.

Self-employed persons are not required to have a hazard register.

What we do need to know, is that the self-employed person is trained

and/or experienced in their work, and that they are aware and consider

Dec 2006 21


22/59

University of Otago


the hazards they may be generating for University staff, students or

visitors e.g.: fumes generated by a substance in use, restricting public

access.

This assessment process is one part of the compliant contractor

system. The system also requires on site audits to ensure that

contractors are working safety and to their, and our, prescribed

requirements. The permit to work system, standard operating

procedures and green hazard forms are expected to be used by

contractors in the same manner as for University staff to ensure a safe

process of work.

Special attention must be paid to our recognised high-risk work tasks

working at heights, confined space, asbestos and hot work. Where it is

known that a contractor works in these areas, training and procedures

should be a part of the submitted information.

For each contractor, a separate form must be completed as

appropriate for the type of contract relationship. This is importantaudit trial information that must be retained.

Where contractors information has meet the required University

standards, the contractor is considered to be Pre-compliant

contractor. A second letter will be forwarded to the contractor

requiring the contractors employees to attend the University of Otago

Contractors Induction programme to obtain the required identification

badge. A timetable of induction training and/or invitation to identify a

suitable training time will be included.

Dec 2006 22


23/59

University of Otago


Where the University has assessed the information from the Contract

Company but is not satisfied with the compliance level, the contractor

will be informed by letter advising in which area of the health and

safety information is insufficient. The timeframe for rectifying the

deficiencies will be included in the letter for reassessment.

Dec 2006 23


24/59

University of Otago


Section 5: University Contractor Induction

All pre-compliant contractors are required to attend the University ofOtago Contractors Induction Training. Property Services and the

Health and Safety Team will provide this training. A prepared

schedule of training will be forwarded to each pre-compliant contractor

for booking arrangement suitable to both parties.

Records of attendance for each individual at induction sessions must

be signed by both parties, and recorded in the database. Notificationof attendance is required prior to identification cards being issued.

Section 6: Identification Cards

On the successful completion of the induction training, attendees will

provided with the required information for identification cards.

Contractors on site not able to produce their identification card will be

ordered off site. Cards will be limited to 2 years validation and

reissued on completion of a successful 2 year review.

Dec 2006 24


25/59

University of Otago


Section 7: Compliant Contractor Auditing

Having required that contractors provide evidence that they are able

to undertake the work being performed for the University in a safe way

and informing them of the Universitys hazards they may be exposed,

the University must assess the contractors performance.

In essence this is a check to confirm that they are doing what they

have already said they will do. No expectations other than legal

compliance are being required of contractors and any impression that

the University of Otago is being tough on contractors is misplaced.

The audits must be structured, carried out on a regular basis and

performed by staff whom have the training and experience to

competently assess performance.

This will be performed by staff that have had training in this role and

the there is a pre-formatted form for this purpose.

Review of contractor performance may also occur following any

complaints of service, incident or accident occurrence and for any

reported serious harm. The review may require additional controls to

be verified and the University may revoke the compliant contractor

status until the situation is rectified. Failure to meet the requirements

will result in the contractor permanently removed from the complaintcontractor system and may no longer work on University work sites.

Dec 2006 25


26/59

University of Otago


Appendix 1: Case Law and Contractors

The most relevant case law for defining the principal's liability is the

court of appeal decision Central Cranes Ltd. V Department of labour

(1997). This case was generated from a 1994 incident when a TV crew

filmed a rigger walking along a crane's wire rope at the height of 41

meters above the ground, with no harness or safety helmet. The

rigger was employed by a subcontractor engaged by the principal,

Central Cranes Ltd. Central Cranes Ltd case was that they had done all

that could be reasonably required of a principal by employing a

competent contractor. The court of appeal disagreed and identified

the following: Two or more persons may carry the same duty at any one time, and

there are no set rules that shift responsibility from principal to

employer.

The employer has greater responsibilities than the principal does,

however where there is a step that the principal could take

irrespective of the employer steps, the principal is required to take

those steps. Likely and/or unsafe practices that could be identifiedby the principal must be acted on.

The presence or absence of the principal or its agents does not

determine responsibility. Therefore, if working at heights is a likely

work task of the contractor, the principal has a duty to ensure that

all height work will be done safely.

The principal cannot escape health and safety responsibilities by

leaving safety measures the responsibility of the contractors. The

principal must incorporate and allocate responsibility for safety

features.

Consultation and communication between all parties with

responsibility for the worksite are essential.

Risk analysis is required for every situation.

Dec 2006 26


27/59

University of Otago


Even when engaging a contractor with more specialist knowledge

does not mean that the principal has no duties under the legislation.

If the principal provides equipment for use by contractors

employees, there are duties to ensure that the equipment remains

safe for use and well maintained.

Safety is a critical factor in the contract negotiations and contract

duration. The principal needs to clearly identify the required

standards of a contractor then maintain those standards.

The Court of Appeal identified the following steps that Central Cranes

Ltd could have taken:

The stipulation in advance of safety standards; and

Identifying steps to be taken if and when unsafe practices are

observed on the worksite.

Dec 2006 27


28/59

University of Otago


Dec 2006 28


29/59

University of Otago


Appendix 2 :

Introduction

-Employment Agreement (Agreement of Service) applies to a personwho is an employee of the University -Contractor Agreement (Contractfor Services) applies to a person or entity who is an independent

contractor

In most cases a casual or fixed term employment agreement is theappropriate course. The Employment Relations Act 2000 (ERA)requires stated grounds for such short or limited arrangements, e.g. aspecific project, translation services, lecturing services. The Universitypreference is for employment agreements however the Universityaccepts that for some situations it is appropriate to have a Contract forServices.

To determine the correct arrangement you need to assess whether the

individual is an employee or contractor. The Inland RevenueDepartment (IRD), the Employment Authority and courts havedetermined various tests to determine the real relationship. Thefollowing table demonstrates the main principle differences betweenbeing an employee or a contractor;

1 Employee or Contractor?2 Existing Employees

Employee Contractor

Agreement of Service Contract for Services

-employed by an entity (under anemployment agreement)

-independent business or service(sole trader, partnership, trust orcompany)

Dec 2006 29
http://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServices


30/59

University of Otago


- payment of wages/salary -lump sum payment -withholdingtax deducted (if applicable)

-under supervision of anotherperson -employer can control

what, how, when, hours of andwhere the employee will work

-responsible for management ofwork output -provides own tools,

transport, skills -choose whetherto be available -has choice ofwhom they work for

-employee attends a workplace(cannot send someone else inhis/her place)

- can sub-contract to anotherperson to provide that service

-right to suspend or dismiss - cannot be dismissed - law ofcontract

1 (a) If an individual is an existing employee of the University a

Contract for Services is not appropriate. There are risks associated withboth tax (IRD) and ERA requirements in regard to the nature of therelationship. There are other implications for the University in regardsto existing on-site employment agreements.2 (b) If the individual is an employee for another organisation thenit is unlikely they will be a contractor.3 (c) For Research contracts. In same case these contracts are 3rdparty contracts as a result of a Prime Contract with anotherorganisation.

In any of the above situations obtain full details of the proposed

arrangements and discuss with your Research Adviser or HR DivisionalManager before proceeding with formal arrangements.

4. What Are The Essential Differences Between anEmployment Agreement and a Contract for Services?`Agreement of Service (Employee) is subject to common law and the provisions of the EmploymentRelations Act (ERA) Employees are usually paid for a number of hours, which doesnot necessarily relate to their output. If an employee is injured at work, under the Accident InsuranceAct the employer has liability for 80% of income.

Contract for Services (Contractor)

is not subject to the provisions of the ERA, breaches of contractare found in common law and statute law. If you are suing for

Dec 2006 30
http://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServices


31/59

University of Otago


damages under breach of contract a loss of some kind must havebeen incurred as a result of the breach. Contractors provide certain outputs for a defined price. There is no statutory requirement in respect of independentcontractors to provide for holidays, sick pay, accident insurance,

minimum levels of remuneration or maternity leave, or to pay PAYE orFBT, deduct union fees, pay for hours when there is no work and so on. There is no access to the disputes procedure provided under theERA. Withholding tax is normally deducted. Contractors must arrange payment of the ACC levy separately.

5. Procedure for Entering into a Contract for Services

If you believe that a Contract for Services would be appropriate, thefollowing procedure should be followed in formalising the Contract:

It is important to clearly define where the funding for the position iscoming from: departmental budget OR research OR other externalfunding source.

CHECK: that you have delegated financial approval to negotiate aContract for Services.

Non Research Funding Contracts Process

a. Download the University Contract for Services template attached to thisguideline and complete as indicated.

b. Once completed, forward electronically to your HR Divisional Managerfor final checking. There should be neither new clauses added norclauses removed from the template.

c.On receipt of approval to proceed from the HR Divisional Managerfinalise the Contract with the Contractor by having them sign thecontract and initial each page (bottom right).

d.Forward the Contract to the HR Divisional Manager for signature onbehalf of the University.

e.

The original contract is returned to the Department for filing; -A copy isretained by the HR Divisional Manager and information entered incentral database -A copy is sent to the Accounts Manager, FinanceDivision for reference for payment purposes

Research Funding Contracts Process

Dec 2006 31
http://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServices


32/59

University of Otago


1 f. If the funding is research or grant based then you need tocontact the Divisional Research Adviser from Research and Enterprise.This should be when you are at the early stages of making anapplication to the funder. The decision on whether the staff requiredfor the research will be an employee or contractor will impact on the

content of your application and accuracy of your budget.2 g. Complete the template with the Research Adviser. Oncompletion of the template the Research Adviser will work throughwith you the Contract for Services document. The Research Adviserwill then ensure that the Contract is signed on behalf of the University.3 h. The original contract is held on file at the Research andEnterprise office. -A copy is sent to the Researcher and DivisionalAdministrator -A copy is sent to the Accounts Manager, FinanceDivision for reference for payment purposes

The Contractor must not start performing

the services until the contract has beensigned by both parties.

6. Withholding Tax

Withholding Tax is an IRD (Inland Revenue Department) taxrequirement and is deducted at source where the recipient is not anemployee.

An IR330 form is required to be completed by the Contractor otherwisean additional rate is applied (no declaration rate) which is on top ofthe required withholding tax deduction.

A contractor may have a Certificate of Exemption which allows them toreceive full payment without the deduction of withholding tax. Thisshould be noted in your Contract for Services document.

Different withholding tax rates apply to different activities and youshould check this with your Adviser. However, in general the Universitydeducts 20% withholding tax from the amount owing to the contractorunless an exemption certificate applies. For Non Resident Contractorsdifferent rates apply; again the contractor could obtain an exemptioncertificate for the New Zealand IRD.

7. Plain Language Explanation of Clause 2.18 and Clause2.19

Dec 2006 32
http://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServices


33/59

University of Otago


Clause 2.18 of the agreement template allocates responsibilitybetween the University and the Contractor for claims which may arisein connection with the services which are to be provided. Under thatclause the Contractor accepts liability for claims which arise as a resultof the Contractor's breaches - either breaches of the agreement itself,

or breaches of the requirements of the Contractor's profession.

Clause 2.19 records that the University arranges liability insurance forContractors, other than Contractors - such as medical professionals -who will already have equivalent cover. Arranging liability insuranceby the University is an automatic process and does not require furtherdocumentation.

If a Contractor does face liability, the insurance cover can be expectedto protect the Contractor personally, except to the extent of the policyexcess. It is important to note that clause 2.19 records certain

disclosure obligations which apply in respect of the insurance. If theContractor is responsible for a failure to observe those requirements,and there is no insurance cover as a result, or if the breach is outsidethe terms of the cover, the Contractor may be personally liable underclause 2.18.

Note: When completing the Agreement, ensure the Contractor deleteswhat does not apply under(d), e.g. (i) The contractor does hold professional indemnity insurance OR (ii) The contractor does not hold

professional indemnity insurance.

Proceed to the tables to determine the correctrelationship for your situation

8. Complete the following tables to determine the correctrelationship

A. The control test has been the most common test utilised todistinguish between independent contractors and employees. The testanalyses the nature and degree of detailed control exercised by theemployer over the worker. The greater the degree of the control bythe employer, the more likely it is that the worker is an employee.

TABLE A -- CONTROL TEST A B

Dec 2006 33


34/59

University of Otago


Does the potential contractor have control over how, where andwhen the services are performed (within practicality)?

Yes No

Is the potential contractor responsible for the quality and pricing ofthe services to be provided?

Yes No

Will the potential contractor supervise the provision of servicesand can the Potential contractor hire other people to perform someor all of the services?

Yes No

B. The integration test (also known as the organisation test) is basedon the notion of an employee as being part and parcel of theorganisation in which he/she is employed. By way of contrast, anindependent contractor, although doing work for a business is notintegrated into the business, and is only an accessory.

Dec 2006 34


35/59

University of Otago


TABLE B INTEGRATION TEST A B

Are the services to be provided by the potential contractordifferent from work usually performed by Employees of theUniversity?

Yes No

Will the potential contractor pay for any expenses incurred inperforming the services? e.g. use of the Universitys phones andadministration services.

Yes No

Will the potential contractor invoice the University for the servicesprovided?

Yes No

Will the potential contractor be paid only as the services areperformed as opposed to a regular salary payment?

Yes No

Are the services to be performed by the potential contractor one-off as opposed to there being a continuous need for the services?

Yes No

Does the potential contractor have a Staff ID Card? No Yes

C. The independent test focuses on the manner in which the workerordinarily performs his/her business or work, including their economicinvolvement (for example, an independent contractor can make aneconomic loss from a contract).

TABLE C INDEPENDENCE TEST A B

Will the potential contractor supply or be charged for thenecessary tools, vehicles, office, phone, computer etc to performthe services?

Yes No

Will the potential contractor be free to work for otherorganisations?

Yes No

Does the potential contractor have their own client base? Yes No

Does the potential contractor advertise their services? Yes No

Would the University be required to pay GST in addition to anypayment for the services performed by the potential contractor?

Yes No

Does the potential contractor pay tax, ACC and insurance directly? Yes No

D. The economic reality test involves examining the total situation ofthe work relationship to determine its economics reality. This includeshaving regard to circumstances prior to entering into the contract andthe conduct of the parties since.

Dec 2006 35


36/59

University of Otago


TABLE D -- ECONOMIC REALITY TEST A B

Would the potential contractor be exposed to normal business

risks in the provision of the services to the University?

Yes No

Would the potential contractor be liable for correcting sub-standard work?

Yes No

E. Finally, the intention test examines the intention of the parties in therelationship. Usually, intention is demonstrable from the expressterms of the contract between the two parties. However, the contractmust be consistent with the actual circumstances and conduct of theparties to the relationship.

TABLE E INTENTION TEST A B

Would the potential contractor be performing services which hadbeen performed by independent contractors?

Yes No

Could the University sue the potential contractor for loss resultingfrom the provision of services?

Yes No

If the services were not performed to the standard specified in theproposed contract with the potential contractor, could theUniversity withhold payment?

Yes No

Has the potential contractor specifically stated that they want to

provide services to the university as an independent contractor?

Yes No

Has the potential contractor always worked with the University asan independent contractor?

Yes No

If all of the responses to the questions in Tables A-E are in column A,then the relationship is that of a Contractor (Contract for Services)

If one or more of the responses to the questions in Tables A-E is incolumn B, then the Manager answering the questions should contactHR Divisional Manager or Research Adviser (Research & Enterprise)

for assistance before proceeding.

Dec 2006 36
http://www.otago.ac.nz/humanresources/forms/index.html#ContractServiceshttp://www.otago.ac.nz/humanresources/forms/index.html#ContractServices


37/59

University of Otago


Appendix 3: Contractor Type Assessment Form

Contractor Company:

This form is to be used to ascertain whether the company/person being

retain is a contractor as defined by s.18 Health and Safety in

Employment Act 1992, and if they are what category of contractor they

are.

Contract of Service or Contract for Services?

Yes(Employe

e)

No(Contract

or)1. Control of Work Will the work being

undertaken be under the direct control of a

University of Otago staff member?2. Integration Is the work being undertaken

part of the normal function of the university.3.

Economic Reality Is the person on a fixed

hourly rate? Does the University of Otago

control of the resources being used on this

contract?

Decision

If you have answered Yes to all questions the person is to be

considered for the purposes of Health and Safety to be an employee of

University of Otago and must be provided with the relevant Health andSafety Induction.

If you have answered No to all questions the person is a

contractor and must complete the Compliant Contractor Process

Dec 2006 37


38/59

University of Otago


Mixed response

If the decision is not clear considering the factors listed above the

following considerations should be taken into account. Consider all

issues outlined and make a decision based on the balance of the

considerations if required discuss this with the University Health and

Safety Adviser.

Additional Considerations:

The following issues show how the relationship would vary between

University of Otago as an employer and as Principal.

University as Employer University as PrincipalCan choose which employees do

which task

Cannot specify who will undertake

specific tasksRegular payments e.g. wages or

monthly invoice

Lump sum for completion of

contractMust do the work themselves Can delegate work to othersCan be dismissed Must cancel contract

Assessed by: Date:

Time:

Signature:

Assessment of Contractors type:

Self Employed Contractor Employee

Contractor Database Updated: Date:

Dec 2006 38


39/59

University of Otago


Compliant Contractor Monitoring Checklist

MONITORING CHECKLIST

Contractor: Contractor Number:

Contract or Purchase Order: Department:

Type of Work:

Location of Work:

Contractor Comments

Site Specific Safety Plan

if applicable

Written plan available on-site

Defined responsibility for

H&S

Evidence of planning and

reviewHazard Management

Hazards identified for job

(green form signed and

updated)

Hazard appropriately

controlled

Hazards regularly

Dec 2006 39


40/59

University of Otago


assessed

Permit(s) to work

considered/issued

Lab manager contacted

where work is in a

laboratory

Site housekeepingTraining & Supervision

Staff on-site appropriately

trained for work

Supervision of staff not

adequately trained

Training in all PPE, plant

and chemicals used

Injuries

Reporting procedure in

place.

Serious harm reporting

procedures including

notification to the

University.

Trained First-Aider on-site

Emergency Procedures

Plan for all likely

emergencies

Allocation ofresponsibilities

Training performed in

emergency plan/sSub Contractors

Health and Safety

Dec 2006 40


41/59

University of Otago


standard for all

contractors

Monitoring of contractors

performance

Details where health and safety performance is not satisfactory:

Notification of Hazard Advice Issued NA/Yes Date:

Unsafe Condition Fixed: Date:

Assessed by: Date:

Time:

Signature:

Recorded in Contractor Database:

Date:

Dec 2006 41


42/59

University of Otago


Appendix 4 : Self Employed Contractor Letter

RE: Contractor Health and Safety Control

The University of Otago has established a Health and Safety Compliant Contractors List and

selected contractors who have met our Health and Safety standards will be added to this list. The

list will be reviewed every 2 years.

As you will no doubt be aware, when we employ a Contractor to carry out a task or service for us,

it becomes our responsibility to ensure that all Health and Safety issues are addressed

appropriately.

The University has identified you as a Self-Employed Contractor. We define a Self-Employed

Contractor as a contracted individual who does not have employees. If this is incorrect, please

advise us. To become a compliant contractor for the University of Otago, we need to be sure that

you have suitable Health and Safety Management Systems in place. We ask that you complete

the attached form (or supply a copy of your Safety Management Plan, Health and Safety Manual

or similar) by 20 February 2004 as evidence that you have identified, assessed and controlled the

hazards relating to the work you undertake for the University of Otago and that you are suitably

trained in relation to these issues.

In order to meet our requirements under the Health and Safety in Employment Act 1992, we will

be requiring contractors to attend induction training on the University of Otagos Health and

Safety Management Systems. We will advise you of the training schedule on receipt of the

necessary health and safety information.

Dec 2006 42


43/59

University of Otago


SELF-EMPLOYED CONTRACTOR

Self-Employed (Trading) Name: _ ______

Address: ______

Contact Person: ________________________________________________________________

Work Phone: ______________________ Cell Phone: __________________________

Trade and Type of Work Undertaken:

__________________________

Training and/or Expertise to Undertake Work:

Safety Precautions/Hazard Management

Signed By : Date :

Dec 2006 43


44/59

University of Otago


Consultant Letter

RE: Contractor Health and safety Control

The University of Otago has an established Health and Safety

Compliant Contractors List and selected contractors who have met ourHealth and Safety standards will be added to the list. The list will bereviewed every 2 years.

As you will no doubt be aware, when we employ a Contractor to carryout a task or service for us, it becomes our responsibility to ensure thatall Health and Safety issues are addressed appropriately.

The University has identified you as a Consultant Contractor. We definea Consultant Contractor as someone whose main purpose is to comeon site to design, plan or discuss work, not for the purpose of doing

physical work. If this is incorrect, please advise us. To become acompliant contractor for the University of Otago, we need to be surethat you have suitable Health and Safety management Systems inplace. We ask that you complete the attached form (or supply a copyof your safety Management Plan, health and Safety Manual or similar)by .. as evidence that you have identified, assessed andcontrolled hazards relating to the work you undertake for theUniversity of Otago and that you are suitably trained in relation tothese issues.

In order to meet our requirements under the Health and Safety in

Employment Act 1992, we will be requiring contractors to attendinduction training on the University of Otagos Health and SafetySystems. We will advise you of the training schedule on receipt of thenecessary health & safety information.

If you have any questions or concerns, please contact..

Yours sincerely

Dec 2006 44


45/59

University of Otago


Consultant Contractor

Company :

Address:

Contact person :

Work Phone : Cell Phone:

Type of Work Undertaken:

Training and/or Expertise to undertake work (for eachemployee)

Safety Precautions/Hazard management:

Signed By : Date:

Dec 2006 45


46/59

University of Otago


Position:

Dec 2006 46


47/59

University of Otago


Appendix 4: Material and Goods Supply & delivery, and Site Visitor Letter

RE: Contractor Health & Safety Control

The University of Otago has an established Health & Safety CompliantContractors process. As you will no doubt be aware, when we employ aContractor to carry out a service or task for us, it becomes ourresponsibility to ensure that all Health & Safety issues are addressed.

The University has identified you as a Material, Goods Supply andDelivery Contractor which means you access University of Otago forthe delivery of materials or goods only (if this is incorrect, pleaseadvise us). Your initial visit requires that you report on arrival to the

University contact person and be supervised for the first visit. Therewill be situations where you will make repeat visits and it is notexpected that you will be escorted each time. Once the area fordelivery and access has been clearly defined, visits during normalworking hours can be routine. To this end we have produced apamphlet for your business with onsite safety instructions while on theUniversity of Otago property. A copy of the pamphlet accompanies thisletter.

In order to meet our requirements under the Health & Safety inEmployment Act 1992 we ask that you take the time to read the

pamphlet and to issue it to your employees who will be on theUniversity of Otago property. If you require further copies of thepamphlet please contact Judy Gallie, PO Box 56, Dunedin. Telephone03) 4794026 or Mobile 0274066535.

Dec 2006 47


48/59

University of Otago


Appendix 4 : Contractor Letter

RE: Contractor Health and Safety Control

The University of Otago has established a Health and Safety Compliant Contractors List and

selected contractors who have met our Health and Safety standards will be added to this list. The

list will be reviewed every 2 years.

As you will no doubt be aware, when we employ a Contractor to carry out a task or service for us,

it becomes our responsibility to ensure that all Health and Safety issues are addressed

appropriately.

The University has identified you as a Contractor. We define a Contractor as a contracting

company whose employees come and work on site at the University. If this is incorrect, please

advise us. To become a compliant contractor for the University of Otago, we need to be sure that

your company has suitable Health and Safety Management Systems in place. We ask that you

complete the attached form (or supply a copy of your Safety Management Plan, Health and

Safety Manual or similar) by ------------ as evidence that you have identified, assessed and

controlled the hazards relating to the work you undertake for the University of Otago and that you

have your staff suitably trained in relation to these issues.

In order to meet our requirements under the Health and Safety in Employment Act 1992, we will

be offering contractors induction training on the University of Otagos Health and Safety

Management Systems. It is a requirement of the compliant contractor status to attend this

training. We will advise you of the training schedule on receipt of the necessary health and safety

information.

If you have any questions regarding this please contact directly .

Dec 2006 48


49/59

University of Otago


CONTRACTOR FOR SERVICE

Company:

Address:

Contact Person: ____________________

Work Phone: Cell Phone:

Signed By: Date:

Position:

CONTRACTORS HAZARD IDENTIFICATION AND CONTROL

Provide a list of hazards, which have been identified as potential or actual risks that staff may be

exposed to by the work undertaken at the University of Otago. Control measures relevant to each

hazard must be supplied.

Hazardous Substances

All commonly used hazardous substances must be listed. The Contractor must undertake

that appropriate training has been carried out in hazardous substances use and that the

appropriate protective equipment will be worn.

Hazardous Plant, Equipment and Tools

This must include all plant, equipment and tools that have the potential to pose a hazard

to staff.

Hazardous Processes

This must include all processes that have the potential to expose a hazard to staff.

Training and Supervision

The Health and Safety in Employment Act 1992 requires that all staff are provided with

adequate training and supervision to enable them to undertake the work they are being

asked to do in a safe manner. We expect as minimum, evidence that you have trained

your staff in relation to the hazards you have identified. There should also be evidence of

Dec 2006 49


50/59

University of Otago


the fact that this is an on-going process and those identified hazards are regularly

reassessed.

Injuries

It is a requirement of the Health and Safety in Employment Act 1992 that every business

maintain a register of all injuries and near misses, those of which cause serious harm

must be reported to the Occupational Safety & Health. We expect to see as a minimum,

evidence of the fact that there is a procedure requiring the reporting and investigation of

injuries.

Emergency Procedures

It is a requirement of the Health and Safety in Employment Act 1992 that every business

develop a plan to manage all likely emergency situations. We will expect as minimum,

evidence that this issue has been considered and that an emergency plan has been

prepared for every likely emergency.

Contractors and Subcontractors

The University of Otago has potential liability for your contractors and therefore requires

that you set an appropriate Health and Safety standard for all contractors that you use.

We will expect to see as a minimum, evidence of a process to assess your sub-contractors

Health and Safety systems.

Please Supply:

A list of Identified Hazards relevant to the work undertaken at the University of

Otago

Documented evidence of training provided

Evidence of your injury/incident reporting and investigation procedures

Evidence of emergency planning

Evidence of control of your contractors

Dec 2006 50


51/59

University of Otago


Appendix 5 :Contractor Assessment Form

Contractor Name:

Phone and contact person:

Assessor:

Date:

Y/N Comments Action

requ

ired

Responsibilities Defined

H&S Policy or statement

Defined responsibilities

Planning and review

processesHazard Management

Process

Systematic hazard

identification process

Hazard control system in

place

Information provided to

staffTraining & Supervision

Provision

Training system/method

Induction process

Supervision of staff

Dec 2006 51


52/59

University of Otago


Injury investigation and

reporting procedures

Injury and investigation

reporting system

Serious harm reportingEmergency Procedures

Plan for identified

emergenciesSub Contractors(Not

Applicable in All

instances)

Health and Safetystandard for all

contractors

Monitoring of contractors

performance

Comments:

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_____________________________________________________________

Further Information Required

Re-assessment Required Second opinion requested

Completed assessment satisfactory

Signed: _____________________________ Date:__________________

Dec 2006 52


53/59

University of Otago


Self-Employed Contractor: Assessment Form

Contractor :

Name and Contact Number:

Assessor:

Date:

Y/N Comments Action

requ

ired

Nature/type of work

Injury reporting serious

harm notification processTraining and/or expertisedefined

Hazard Management

Process

Potential hazards for

University staff/students

identified and controlledHigh-risk activities

Involved in height work,

confined space, asbestos,

hot work, etc.Comments:

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

____

Further Information Required


Dec 2006 53


54/59

University of Otago


Completed assessment satisfactory

Signed: _____________________________ Date:__________________

Additional Comments by Assessor

Further Information Required Substantially acceptable

with areas of concern


Assessed By: _____________________________

Date:__________________

Dec 2006 54


55/59

University of Otago


Appendix Pre-Compliant Contractor Letter

Re: Health and Safety Requirements for Contractors

Thank you, for submitting your material to Otago University. We are

happy to inform you that your material has been reviewed and met the

requirements of our Assessment Process and therefore your company

has been identified as a pre-compliant contractor. To complete the

compliant contractor status, employees that are likely to be involved in

work at the University of Otago must attend the University Contractor

Induction Training. A schedule of the training sessions is enclosed for

your information. If you have a significant number of employees who

are likely to work at the University, please contact the University, as a

specific induction session may be able to be held at a suitable time.

The training must be completed before a contractor identification card

can be issued.

Yours Sincerely

Dec 2006 55


56/59

University of Otago


There will be situations where there is no response from the

contractor. A follow up letter is to be forwarded if the information is

not received within 4 weeks of the initial letter.

4.3 Non-Response to Initial Contractor Letter

Dear Sir / Madam

You have received an earlier letter from us outlining our contractor

requirements, dated . As part of these requirements we required

you to return material from your Health and Safety system, to this datethis has not been received.

Should you for some reason not received the letter please contact us

and we will forward you a replacement copy.

Should you have received this material but have any problems with the

requirements of this document please contact us, we will be happy to

discuss any issues with you.

Can you please give this your prompt attention, as it is our intention to

have this process completed as soon as possible.

Yours sincerely

Dec 2006 56


57/59

University of Otago


There will be situations where there is no response from the

contractor. A follow up letter is to be forwarded if the information is

not received within 4 weeks of the initial letter.

Non-Response to Initial Contractor Letter

Dear Sir / Madam

You have received an earlier letter from us outlining our contractor

requirements, dated . As part of these requirements we required

you to return material from your Health and Safety system, to this datethis has not been received.

Should you for some reason not received the letter please contact us

and we will forward you a replacement copy.

Should you have received this material but have any problems with the

requirements of this document please contact us, we will be happy to

discuss any issues with you.



Yours sincerely

Dec 2006 57


58/59

University of Otago


Where the University has assessed the information from the Contract

Company but is not satisfied with the compliance level, the contractor

will be informed by letter advising in which area of the health and

safety information is insufficient. The timeframe for rectifying the

deficiencies will be included in the letter for reassessment.

4.4 Additional Information Request Letter

Dear Sir / Madam

Re: Compliant Contractor System

Thank you for your response to our earlier letter outlining our

contractor requirements dated . We have received the information

that you have submitted.

The University has assessed the information, and additional

information is sought in relation to . Please forward supporting

material to verify that you are able to meet the Health and Safety in

Employment Act requirements in relation to this matter.

If you have any problems with the requirements of this letter please

contact us, we will be happy to discuss any issues with you.



Yours sincerely

Dec 2006 58


59/59

University of Otago


4.5 Compliant Contractor Acceptance Letter

Dear Sir / Madam

Subject: Compliant - Contractors Health and Safety

Compliance.

Thank you for responding to our process of ensuring Contractor

compliance. On behalf of the University of Otago and following a

review of your Health and Safety material we would like to advise you

that your company has been added to our Compliant Contractors List.

Please find attached a list of the employees that have attended the

required Contractor Induction Training and may be issued with the

required identification cards (details enclosed). If contractors are not

able to produce their cards, they will be asked to leave the University

site.

We retain the right to assess your compliance with either your own or

our Health and Safety requirements at any time while you are retained

by us. At any time if you have Health and Safety concerns when

dealing with the University of Otago please contact

Compliant contractors are subject to audit by the University of Otago

at any time. The compliant status is valid for 2 years, at which time

your company will be reviewed.

Yours Sincerely