Introduction

Sports law in New Zealand has become increasingly dynamic over recent years, a trend which reflects the breadth of sporting activity in New Zealand, at all levels, and both professional and amateur.

This article explores some of the key developments and trends which will continue to shape sports law in New Zealand in 2024 and beyond, in sports governance; integrity; and athlete rights.

Governance

A current area of focus is the reform and strengthening of governance arrangements within sports organisations. These reforms follow global trends and calls for greater transparency and accountability, which has meant that sporting entities and bodies have been under significant pressure to improve and enhance their governance structures and performance.

In the New Zealand context, a range of different legal structures are used by amateur and professional sports to govern their activities. 

These include the use of limited liability companies – particularly in professional sports, such as rugby, cricket, netball and other commercially focused sporting activity. 

Some sports organisations are registered under the Charities Act 2005.  However, charitable status requires an entity to have certain characteristics, most importantly the requirement that the objects of the charity be designed to benefit the community as a whole. This requirement has, for example, excluded organisations which have purposes of promoting competitive sport as an end in itself, and not as a means to advance valid charitable purposes.

However, the most commonly used legal entity for sports organisations is the incorporated society. 

The Incorporated Societies Act 2022 replaced an Act which had been in place since 1908 and under which over 30,000 incorporated societies are registered. Registration provides many advantages, including separate legal personality, and limited liability. But there were problems with the 1908 Act. It did not set out the obligations of those who volunteer to run the incorporated societies or give sufficient guidance to them. It did not provide a framework for dispute resolution. And it failed to expressly set out what is legally necessary to run an incorporated society.

The purposes of the 2022 Act are, among other things, to “provide a legislative framework that promotes high-quality governance of societies” and to make the law of societies more accessible. The purposes of the Act also recognise the principles that:

• societies are organisations with members who have the primary responsibility for holding the society to account;
• societies should operate in a manner that promotes the trust and confidence of their members;
• societies are private bodies that should be self-governing in accordance with their constitutions, any by-laws, and their own tikanga, kawa, culture, and practice, and should be free from inappropriate government interference; and
• societies should not distribute profits or similar financial benefits to their members.

The overhaul of the Incorporated Societies Act reflects a reform process which began in 2010 and took 12 years to conclude, with the passing of the Act in April 2022. It also reflects a growing trend towards openness and transparency, with changes to the obligations resting upon officers and members of societies, mirroring the obligations in the Companies Act 1993, and the Trusts Act 2019. 

Apart from the impetus towards governance improvements created by the new legislation, improvements in governance and “good governance” models have been driven by the government organisations that fund and support sport – in particular, Sport NZ, and its subsidiary, High Performance Sport New Zealand (HPSNZ), the organisation which leads the high performance system in New Zealand and is responsible for the allocation of resources to sports organisations and athletes. Both have, over many years, provided substantial guidance in this area, including best practice guides, template constitutions and rules, and checklists for use and adoption by sports organisations. 

Increasingly, government funding is contingent upon incorporated societies adopting best practice models as a condition of funding at all levels from community or grass roots sports levels, through to high performance.

There is a complex transitional process in place while incorporated societies re-register under the 2022 Act. The consequence of failure to re-register before 5 April 2026, is that societies cease to be incorporated, but may continue as unincorporated societies, without a separate legal personality, without any automatic right to assets, and with potential personal liability for members.

These consequences, which have been well signalled in advance, are the reasons why 2024 will see significant activity in this space, as societies and lawyers grapple with the new and significant additional mandatory requirements and accompanying processes. 

Given that many incorporated societies are operating on constitutions which were written, in many cases, decades ago, and that most such societies are run entirely by volunteers, the re-registration process presents significant practical and logistical challenges to those societies, and to lawyers who will be required to assist them through the re-registration process. 

Integrity

In New Zealand, as around the world, maintaining integrity and combating corruption in sport has become a priority for policy makers, sports governing bodies and law enforcement agencies in New Zealand.

In the wake of high-profile investigations into the culture of numerous high-performance sports including gymnastics, cycling, women’s football, women’s hockey, women’s rugby and canoe racing, as well as reviews of the Sports Tribunal of New Zealand and of elite athletes’ rights and welfare, Sport NZ commissioned a comprehensive Integrity Review which, in September 2019, identified the issues which had arisen across the sector as different elements of a core issue within the sector – integrity. 

The Sport Integrity Review made 22 recommendations designed to address issues identified within the sport sector, including proposed interventions and improvements to institutions and mechanisms already in place, along with new initiatives. 

An immediate outcome was the establishment of the Sport and Recreation Complaints and Mediation Service (SRCMS), a “complaints and mediation service for sport and recreation across Aotearoa New Zealand...”. 

Sport NZ then appointed the Integrity Working Group (IWG), to consider the establishment of a government-funded sport integrity organisation, with the express purpose to “evaluate a range of options and recommend... what is considered the most appropriate institutional arrangement(s)/structure(s) to manage all the various integrity elements across the system and accommodate the 22 recommendations from the Integrity Review once implemented”. 

These purposes required an assessment of the then current institutional arrangements involving Drug Free Sport NZ, the Sports Tribunal of New Zealand, the integrity functions within Sport NZ and independent services funded by Sport NZ, such as the SRCMS. 

The IWG provided its final report to Sport NZ and the Minister for Sport and Recreation, in April 2022. It reported that, despite progress within the sector, there remained a lack of capability in relation to integrity issues, particularly in the reporting and management of complaints – where sport organisations, particularly smaller ones, were struggling to keep up with what had become an increasingly complex and multidimensional area. The report also identified a lack of independent oversight, a confusingly multilayered and inconsistent system, and very limited guidance in relation to competition manipulation.

The IWG’s conclusions included the following.

• The current integrity system was not considered to be athlete and participant centred, with trust lacking. 
• Existing initiatives were still in their infancy and with little to suggest that athletes and participants were at the centre of the system or involved in the design of education, training, and dispute resolution processes.
• The current integrity system was complex and lacked accessibility for participants, with resolution of integrity issues being entirely dependent on the effectiveness of the mechanisms adopted by the relevant sport organisation. The SRCMS, while offering some promise, was entirely consensual in nature, had no decision-making role, and no ability to enforce any outcomes.
• The current integrity system lacked clear integrity standards. While there had been good work done by Sport NZ in issuing useful resources, there was no obligation upon sports organisations to adopt them, and their take up had been mixed.
• There was also no national Code of Sport Integrity setting minimum standards, which had resulted in a lack of consistency across the whole sporting sector.
• Independence was lacking within the sector, where Sport NZ and HPSNZ had become involved – because of their close relationships with NSOs and organisations as funders and providers of other support. The IWG concluded that the perception of a lack of independence was in fact a lack of actual independence. Even the independence of the SRCMS was compromised by the fact that it was funded by, contracted to, and monitored by Sport NZ.
• The existing system had caused significant costs within the sector when integrity issues arose, both financial and human, because of the ineffectiveness of the current mechanisms. In the most serious of cases, major investigations and reviews had been required, at substantial cost to the sector, and personal harm having been experienced by survivors of integrity breaches. 

The IWG considered three alternative options for the future. The option recommended, and adopted, was the creation of a new, standalone integrity entity, with responsibility for sport integrity and entirely independent of Sport NZ. The recommendations also included the introduction of a national Code of Sport Integrity, the adoption of competition manipulation standards, and the adoption of the Macolin Convention. 

The upshot of the IWG report was the passing of the Integrity Sport and Recreation Act 2023, with a commencement date of 1 July 2024. The purpose of the Act is to establish the [Integrity Sport and Recreation] Commission which is to: “enhance integrity within sport and physical recreation to protect and promote the safety and well-being of participants and the fairness of competition:

• with respect to anti-doping, give effect to the World Anti-Doping Code in New Zealand in order to achieve the Code’s purposes of –
1. protecting athletes’ fundamental right to participate in doping-free sport and in this way promote health, fairness, and equality for athletes worldwide; and
2. ensuring harmonised, co-ordinated, and effective anti-doping programmes at an international and national level with regard to detection, deterrence, and prevention of doping.”

The objective of the Commission in performing its functions and exercising its powers under the Act, is to achieve the purposes set out above by:

• preventing and addressing threats to integrity in sport and organised physical recreation; and
• promoting participants’ trust and confidence and integrity within the sport and physical recreation sector. 

The phrase “threat to integrity” has a statutory definition which includes manipulation or attempted manipulation of results or sporting competitions; sports betting activity connected with competition; manipulation or misuse of inside information; doping; racism, unlawful discrimination, bullying, violence, abuse, sexual misconduct, intimidation or harassment in sport, and corruption fraud and other forms of deception or breach of trust in sport. It also means a failure by an organisation in the sport and physical recreation sector to take reasonable measures to prevent such activities, and to safeguard children in sport.

The functions of the Commission are set out in Section 13 of the Act and are extensive – there are 18 specified functions, grouped under the headings of Promoting, advising, and leading on integrity in sport and recreation; Integrity Codes, investigations, discipline and dispute resolution; Sports Anti-Doping; and various general provisions.

An Establishment Board has been appointed to oversee the work of the Integrity Transition Programme (ITP), in preparation for the commencement date of the Commission, 1 July 2024, which includes the Integrity Code of Conduct which is due to be published in draft for feedback and testing by the sports sector in March 2024, with a projected release date in mid to late 2024.

There is no doubt that the passage of the Integrity Sport and Recreation Act 2023 and the establishment of the Commission represents the most significant overhaul and resetting of New Zealand’s sporting legal landscape since, at least, the passage of the Sports Anti-Doping Act 2006.

Athlete Rights

This area has become a hot topic in the New Zealand sports law landscape in 2024 and promises to be so for some time to come. 

As noted above, numerous reviews into high-performance sport in different sports have led to an increased level of awareness of issues such as athlete welfare and wellbeing, and mental health. While the integrity reforms discussed above deal with some of those matters, there are other aspects of “athlete rights” that are of particular interest and current focus. 

This includes the legal status of athletes, and whether they are to be regarded as employees or not. These issues are closely linked with the ability of athletes to negotiate for better levels of protection than they are perceived to have at present, and greater levels of compensation.

Generally, New Zealand athletes are employees, or independent contractors, or may be “grant recipients”. The nature of the relationship depends on the particular sport.  For example, all professional rugby players in New Zealand are employees of New Zealand Rugby, the national NSO, and New Zealand’s professional cricketers operate on an independent contractor-type model. In both cases, a collective approach to bargaining of the terms of engagement and employment is taken. Similar arrangements apply to professional netballers. 

Whether an athlete is an employee, or an independent contractor, or a grant recipient has significant implications for that athlete’s rights. Employers and employees in New Zealand are subject to the Employment Relations Act 2000 (ERA), together with other statutes such as the Holidays Act 1993, the Health and Safety at Work Act 2015, and the Human Rights Act 1993. 

Employees benefit from the ERA’s prescription of minimum wages, holiday leave requirements, the right to additional remuneration for those who work on holidays, and the obligation to ensure that employment agreements are recorded in writing. Save for initial employment trial periods, and unless the employment arrangement is subject to a fixed term – for good reason – an employee’s employment can only be terminated for cause, for reasons of redundancy or medical incapacity, and in all cases only after a fair process has been followed by the employer before determining an employee’s employment.

The most significant development in this area has been a decision of the Employment Relations Authority (Authority) in favour of a union of high-performance rowers and cyclists called “The Athletes’ Co-operative” (TAC), in its claim against HPSNZ, in January 2024. 

The problem addressed by the Authority’s decision arose when the TAC sought to commence bargaining with HPSNZ for a collective agreement covering elite athletes who are members of the TAC. The TAC had given HPSNZ a notice to initiate bargaining in accordance with the ERA and contended that HPSNZ was obliged to engage with it in collective bargaining, in good faith. None of the TAC’s athlete members are, or were previously, employed by HPSNZ within the coverage the TAC proposed.

HPSNZ declined to engage in collective bargaining on the basis that it did not employ athletes, including the members of the TAC. It maintained that it could not be required to do so and that there was no relevant employment relationship. It also contended that the members of the TAC were not employees. 

The dispute was – ostensibly – not about status or whether the members of the TAC were employees of HPSNZ rather than independent contractors. The Authority described the contention as being “whether the TAC had validly initiated bargaining, and whether HPSNZ was obliged to engage in good faith bargaining despite the fact that it did not employ nor did it intend to employ any of the TAC’s members”.

The Authority accepted that none of the athlete members of the TAC were “currently” employees of HPSNZ and that the provision of funding, and the terms and conditions of that funding, were not matters in relation to which there was any direct employment or contractual relationship as between those athletes and HPSNZ. Rather, the athletes had direct relationships with their respective NSOs, Cycling New Zealand and Rowing New Zealand. 

The TAC submitted that as a union – required by the ERA – it had initiated bargaining with a single employer, namely HPSNZ. It contended that the Act applied and that HPSNZ was obliged to enter into bargaining for a collective agreement. 

HPSNZ submitted that the Act contemplated collective bargaining occurring between an employer and a union representing employees of that employer and that because the TAC athletes were not employees, and the establishment of an employment relationship was a precondition to the collective bargaining regime, the Authority had no jurisdiction to direct that collective bargaining be engaged upon.

The Authority recorded that “HPSNZ has no intention of employing the members of TAC... There is no mutual intention as to future employment, nor does HPSNZ wish to employ any persons within the proposed coverage of the notice issued”.

Despite these matters, the Authority concluded that a notice to initiate collective bargaining did not require that a proposed employer have employees within the proposed coverage area identified in notice. Nor was it necessary that a union seeking to initiate bargaining have members that were, at the time of the initiation of that process, employees of the employer. On that basis, the Authority found that a valid notice initiating bargaining had been given by the TAC, and that HPSNZ was obliged to comply with the provisions of the Act concerning such bargaining. 

It is hardly surprising that HPSNZ was concerned at the outcome and has appealed to the Employment Court. In announcing the decision to appeal, HPSNZ noted the wider implications of the ruling which had been instrumental in driving the decision to appeal. It noted the concern that the Authority ruling “could have implications not just for HPSNZ, but other government agencies and businesses across New Zealand”, and that the appeal has the support of the Minister for Sport – who is no doubt concerned not only about the implications for HPSNZ, but about the implications for other government sectors – and the sports sector generally. 

Although the outcome does not directly confirm that the TAC athletes are employees of HPSNZ, it appears that, in substance, the Authority’s view is that they must be regarded as at least potential employees – despite HPSNZ’s insistence that it has no intention of employing the athletes.

However, the conclusion that an employer which has not previously employed, which does not currently employ, and which has no intention of employing members of the union may be required to enter into collective bargaining such that there is a “problem arising out of an employment relationship” – the pre-requisite to jurisdiction – appears to require a particularly difficult and strained analysis.

So too the analysis that concludes that an expansive meaning of “employee” is supported by the statutory context – a conclusion which means that the term includes persons who are not employees and who the employer has not does not intend to employ.

The implications of a conclusion that athletes are potentially employees of HPSNZ – or, alternatively, the NSOs through which they are engaged and through which they receive grant funding – are significant. In addition, whilst the stated objective of the TAC is to address a perception that the HPSNZ funding model does not give sufficient priority to issues such as athlete wellbeing and compensation, the broader implications of a determination that an employment relationship exists may have been overlooked. 

For example, if athletes are employees, one consequence would be the greater level of control by their employer than they would have as independent contractors or grant recipients. Such control could extend to such things as the athletes’ activities, their training regimes, the choice of equipment they use, the leave they can take, coaching arrangements, athletes’ relationship with social media, and the ability of athletes to conduct business enterprises on their own account.

Media reports indicate that the TAC is focusing on the extent of remuneration/compensation received by athletes, and clearly the implications for the sector are significant enough in this respect. All stakeholders recognise that in the current climate the available funding for sport is capped and is unlikely to increase in the short to medium term. It is obvious that what the TAC seeks is the reallocation of government funding to the athletes, at the expense of the funding agency – HPSNZ – or the NSO which has responsibility for administering the funding received from the government via HPSNZ, and maintaining the high-performance system in New Zealand. 

The case has parallels with the UK decision of Varnish v British Cycling. Ms Varnish brought a claim against British Cycling and UK Sport, contending that she was an employee. The Employment Tribunal ruled that relationship between Ms Varnish and British Cycling and UK Sport was more akin to that of a student receiving a grant than of an employer/employee arrangement. That decision was upheld on appeal.

While direct comparisons between New Zealand and UK employment law cannot easily be made given the different statutory and legal context, it is clear that the ERA decision has thrown the proverbial cat among the pigeons, and the outcome of the appeal will be closely watched. The prospect of further appeals cannot be discounted.

Conclusion

The above summary by no means reflects all the trends or developments about which comment could be made. What can be said, without doubt, is that the New Zealand sports law landscape is incredibly diverse, active and interesting, and promises to be so throughout 2024 and beyond.