Ask the workers before deciding whether workers exist

Two reviews, zero employees, and one very wrong answer

The Labour Inspectorate looked hard at Gloriavale. It ran formal reviews in 2017 and again in 2020-21, and both times concluded it had no ability to intervene because community members were not employees. That was not a marginal call on thin evidence. One of the inspectorate’s own inspectors recorded that the payment structure was a fabrication, describing the process of putting money into accounts only for the financial controller to remove it again as a sham.

Now a fresh detail sharpens the failure. Stuff reported on 13 August 2026 that inspectors knew of child labour concerns but excluded children from the inquiry. That is the difference between a compliance miss and a methodology failure. If the people allegedly doing the work are shut out of the investigation, the investigation cannot reach a reliable conclusion. It can only ratify whatever the paperwork says.

The courts kept finding the opposite

Three times the Employment Court reviewed the same arrangement and reached the opposite verdict.

In May 2022, in Courage v Attorney-General, Chief Judge Christina Inglis found three male plaintiffs were employees from as young as age six. The court found the work could not be described as chores because of its commercial nature and that it was strenuous, difficult and sometimes dangerous. The decision recorded plaintiffs working 9 to 14 hours a day, six days a week, while paid at minimum wage rates for only eight hours a day, five days a week. Community leadership admitted that without child labour they would definitely have to restructure and hire adults, which tells you the labour was structural, not incidental.

In July 2023, the court found six female plaintiffs were also employees, not volunteers. In a typical week in 2018, the kitchen workforce produced more than 11,000 meals while laundry workers washed at least 17,000 items. This was industrial scale, not domestic help.

In November 2024, the court ruled the Overseeing Shepherd position was the employer of children working there, with Judge Inglis noting that role held ultimate control over the community’s business, partnership and trust activities. Nine plaintiffs have lodged an ERA claim for roughly $5.2 million in lost wages and compensation.

Substance over label is the whole point

The legal principle the court applied is not novel. As BuckettLaw’s 2022 analysis put it, whether someone is an employee depends on the substance of the relationship and how it operated in practice, not the label attached to it. That rule has been settled law for years. What it requires is an enforcement agency willing to look past the paperwork, and that is exactly what did not happen.

The inspectorate knew it was dealing with an engineered arrangement. The community founded in 1969 has roughly 600 members, mean age 12, with two-thirds under 16. Members were reportedly coached to describe themselves as volunteers. The regulator interviewed those people, accepted their answers, and closed the file.

Why compliant businesses should care

Strip away the extremity of this case and the enforcement problem is general. Any business that classifies workers correctly, pays minimum wage and holidays, keeps records and meets PAYE is competing against operators who use sham contractor, volunteer or partnership structures to avoid those costs. The methodology exposed here, interviewing people who cannot speak freely, accepting signed documents at face value, and excluding the most vulnerable workers, is a methodology that will miss sham arrangements wherever they exist.

That is not abstract. If a competitor is underpaying and the regulator cannot detect it, the compliant operator is effectively subsidising the cheat’s cost advantage every time it meets its own obligations. Worse, in Gloriavale’s case the structure was allegedly built to capture Working for Families payments, meaning the arrangement drew on the taxpayer as well.

The MSD’s December 2023 response set out expected outcomes including minimum entitlements and children’s rights being upheld. That is belated intent. It took three court rulings and roughly seven years from the first review. The real test is whether the inspectorate now changes how it investigates, or whether it keeps accepting paper arrangements from people who are in no position to contradict them. Until it does, employment compliance for the businesses playing by the rules remains partly theatre.

Sources

• Inspectors knew of child labour concerns but excluded children from Gloriavale inquiry (2026-08-13)
• Gloriavale’s leader was employer of children working there, court rules (2024-11-22)
• Gloriavale leavers were employees, court rules (2022-05-11)
• Gloriavale: Sham payments made to community members, court told
• Ex-members welcome Employment Court ruling over ‘dangerous’ Gloriavale work (2022-05-10)
• Courage v Attorney-General [2022] NZEmpC 77 – Employment Court Decision (2022-05-10)
• Employment Court finds six former Gloriavale women were employees, not volunteers (2023-07-13)
• Cases of Interest: July 2023 – Employment New Zealand (2023-07)
• MSD Official Information Response on Gloriavale (2023-12-20)
• Employment Court Finds Gloriavale Members Employees (2022-05-10)