Union representatives rallied outside the Court of Appeal in Wellington last week in anticipation of the Court of Appeal’s decision on whether Uber drivers are employees or contractors in law.
The two-day hearing followed a ‘landmark’ 2022 Employment Court decision, which found that the drivers in that case were in an employment relationship when driving for Uber businesses.
While we wait with bated breath for the Court of Appeal to release its judgment, Lane Neave’s employment team are happy to answer any questions you might have in relation to your own employees and/or contractors.
Employment Court
In the Employment Court, Chief Judge Inglis found the degree of control Uber was able to exercise over its drivers was reflective of an employment relationship.[1] The level of flexibility, which Uber purported to afford to drivers was “largely illusory” as drivers were adversely impacted if they failed to maintain certain volumes of rides.
The Employment Court also considered that the Employment Relations Act 2000 (the Act) did not exclude joint or multiple employers employing an employee and found that the real nature of the relationship in that case was one of joint employment.
A central aspect of this decision was the significance afforded to the Act as a piece of social legislation. The Employment Court considered one of the Act’s central purposes was to recognise the inequality of bargaining power between employees and employers, that is characteristic of the employment relationship. Read more about the Employment Court’s decision here.
Court of Appeal
Despite the decision being limited to the particular parties involved, the Court of Appeal’s judgment will provide an important precedent on clarifying the employee/contractor distinction in the shifting labour market.
The questions of law to be determined by the Court of Appeal are:
(i) Did the Employment Court err by misdirecting itself on the application of section 6 (the meaning of “employee”) of the Act?
(ii) Did the Employment Court err by misapplying the test in section 6 of the Act or, alternatively, was the Court’s conclusion so insupportable that it amounts to an error of law?
(iii) Did the Employment Court err in finding that joint employment may arise in New Zealand simply because of a number of entities being sufficiently connected and exercising common control over an employee?
Question (iii) concerns a narrower issue of whether entities being sufficiently connected and exercising a common element of control over employees is enough for joint employment. However, it is questions (i) and (ii) concerning interpretations of employee versus contractor, which are at the crux of this case.
Counsel for Uber, Paul Wicks KC, argued in the Court of Appeal that the Employment Court’s decision had put too much weight on drivers’ vulnerability and failed to consider the flexibility and freedom they had in respect of when, for how long, and where they worked.[2]
He also emphasised that Uber drivers had no uniform, signage or business cards, suggesting they were not integrated into the business as would be expected of an employee. Moreover, they could make choices to maximise their own income, and could go overseas for three months without notifying Uber.
Lawyer for E Tū and First unions who represented the drivers, Peter Cranney, argued that Uber had a “system of unparalleled control”, citing the fact all written and voice communication was recorded between Uber and the nearly 7,000 drivers in New Zealand.
Clearly then, the decision rests upon whether the Court of Appeal will take a broader approach to the employee/contractor distinction, thereby recognising the changing nature of the modern labour market.
Where are we headed?
The issue of contractor versus employee is becoming increasingly pertinent, as the ever-expanding ‘gig economy’ continues to create jobs, which offer autonomy and flexibility that is rarely available in conventional work. As such, it may be time for legislative clarity in respect of contractor arrangements.
National and ACT’s coalition agreement provides that contractors who have explicitly signed up for a contracting arrangement cannot challenge their employment status. This suggests the current government is keen to increase certainty in contracting relationships.
- Author: Stella Smith – Lane Neave Law Clerk
[1]E tū Inc & Anor v Raiser Operations BV & Ors [2022] NZEmpC 192.
[2] https://www.thepost.co.nz/nz-news/350217732/uber-companies-appeal-against-employment-ruling-drivers#:~:text=Four%20New%20Zealand%20Uber%20drivers,four%20drivers%20to%20be%20employees.
