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Court decides Uber Drivers to be Employees

Published 26 Oct 2022

The Chief Judge of the Employment Court (“the Court”) has ruled that four Uber drivers of the international ride-share service are employees and not independent contractors.

First Union and Etu sought a joint declaration from the Court that the drivers were employees under section 6 of the Employment Relations Act 2000 and therefore entitled to all the corresponding legal rights and protections under New Zealand employment legislation, i.e. holiday pay, public holidays, sick leave, minimum wage, the ability to initiate personal grievance proceedings, become unionised, etc. The Unions also sought back pay for wages, holiday pay and other minimum entitlements.

The Court sided with the Unions and took the view that the drivers were not independent contractors, but rather they were employees due to the ‘real nature of their relationship’ with Uber after applying the various legal tests that inform this assessment to each of the drivers.

The Court took care to clarify that its decision only applied to the four drivers involved in the case and stated that other drivers for Uber do not instantly become employees. However, the reality is that Uber’s business model is universal across its business and therefore there are likely to be significant legal ramifications for the company because of the Court’s judgement. It is understood that Uber plans to appeal the decision.

This case is a timely reminder to businesses who utilise independent contractors arrangements to be very careful not to misclassify such arrangements when they should be structured as employment relationships. Failure to correctly manage such arrangements can give rise to costly legal disputes, including claims for back pay for failure to pay minimum employment law entitlements, along with personal grievance claims, etc.

If you require further information regarding the distinction between independent contractors and employment relationships you can find more information in the Library on the Employers Toolbox - see Independent Contractors, or phone Employers Assistance on 0800 15 8000 for further advice, or support.