Early last year the Employment Court found that a driver for Uber, Mr Arachchige, was not an employee but an independent contractor. Now, in the recent judgment E tū Inc & Anor v Raiser Operations BV & Ors[1] (the case) the Employment Court reached the opposite conclusion about the status of four Uber drivers and found them to be employees. These four drivers are, in fact, employees despite contracts purporting otherwise and Uber’s insistence that it merely facilitated transactions between drivers and customers. Uber has indicated it intends on appealing the decision.
The distinction between employees and contractors is important, as employment status determines someone’s ability to a raft of legislative minimum entitlements enshrined in the Employment Relations Act 2000 (Act). However, the boundaries for distinguishing employment and independent contracting are increasingly called into question in an age of changing working patterns and recognition that better protections are needed for contractors.
The employee/contractor divide
Whether someone is an employee is judged under section 6 of the Act, which provides the meaning of an employee “any person of any age employed by an employer to do any work for hire or reward under a contract of service”. Whether this exists is determined according to the “real nature of the relationship” between the would-be employee and would-be employer.
Case law from the Supreme Court provides three features that can be considered, namely:[2]
- the level of control exercised over a person;
- the extent of integration of that person in the business; and
- how fundamental they are.
While these three factors have been treated with some level of primacy, the case takes great care to note these are not exhaustive and merely tools that may be used when investigating the nature of a relationship on a case-by-case basis.
Instead, the case refers to the following extended questions to assess the relationship more holistically:[3]
- the nature of the Uber business and the way it operated in practice;
- the impact of the Uber business model and its operation on the plaintiff drivers;
- who benefitted from the work undertaken by the plaintiff drivers;
- who exercised control over the plaintiff drivers’ work, the way in which it was conducted and when and how it was conducted;
- any indications of intention, including what can be drawn from the nature, terms and conditions of the documentation between the parties; and
- the extent to which the plaintiff drivers identified as, and were identified by others as, part of the Uber business.
In considering the above, it was firmly concluded that despite Uber’s intention for the drivers to be contractors and the preparation of documents conveying this, the drivers were employees when driving for the benefit of Uber.
Some of the important observations made in reaching this conclusion included Chief Judge’s finding that despite Uber operating a non-traditional employment model, there was evidence that the relationship carried a high level of control over and subordination of drivers and drivers were only working in Uber’s interest where there is no ability to promote or grow your business.
Further, questions were raised about the illusory nature of flexibility and choice: drivers gained incentives for working longer and faced consequences for failure to maintain certain volumes of rides. This is contrasted to flexibility that is available in an employment relationship, where employees are free to ask for flexible working hours and under the Act employers may only reject this request in certain circumstances.
Changing labour markets
In the case, a great amount of weight was given to the fact the Act is social legislation and must be applied in a way that upholds its central purpose of recognizing there is an inequality of bargaining power. Accordingly, it was asked whether the drivers fell in the range of workers to which the Act intended minimum worker protections to apply, having regard to the context of an evolving labour market.
While the case uses the three tests above, arguably a strong call for change has been made where it was noted: “It is for the Court of Appeal and the Supreme Court of New Zealand to right the course if that is considered appropriate.”
Conclusion
We look forward to seeing how the case is received, as it indicates a shift towards an understanding of the employee/contractor distinction that is adaptive to the evolving labour force.
While the case applies only to the drivers that brought it and is not a binding determination of all Uber drivers, since it was observed that there is some uniformity in how Uber operates and drivers are engaged, it seems likely the case will pave the way for broader change.
[1] [2022] NZEmpC 192
[2] Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721, [2005] ERNZ 372.
[3] at [25].
