The Chief Judge of the Employment Court has ruled that four Uber driver are actually 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 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. Significant control by Uber was evident and exerted on the drivers and that Uber was not merely acting in a facilitator role as it claimed. There are incentive schemes that reward and benefit their financial gain, but prices are controlled by Uber. Uber guidelines also set out behaviour standards that Uber can change and use to discipline and performance manage drivers. Organisational requirements along with terms and conditions of engagement restricts drivers from forming their own relationships with riders or organising substitute drivers to work in place of them.
The Court took care to clarify that its decision applies only to the four drivers involved in this 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 operation and therefore there are likely to be significant legal ramifications for the company because of the Court’s judgement. Understandably Uber plans to appeal the decision.
The Unions on the other hand plan to seek for backpay of wages and entitlement for these 'employees' and start a collective bargaining action with Uber. Unless the Court of Appeal over-turns Chief Judge Christina Inglis' decision Uber as we know it will be forced to change.
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.
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.