Disputes involving the employees vs independent contractors are relatively commonplace in terms of New Zealand's employment relations landscape. One of the most significant and high-profile cases in this area in recent times involved Uber. This has now been tested & confirmed again by the Court of Appeal in favour of a finding that the Uber drivers involved in the case were 'employees' (not contractors).
In summary, four Uber drivers with the help of E Tu and First Union ('the Unions') took Uber to the Employment Court in 2022 claiming that they were 'employees'. Uber argued that the drivers were contractors, not employees. The Employment Court decided the four drivers were employees of Uber - Not independent contractors. This was principally due to the degree and significance of control applied by Uber in terms of how the relationship functioned in practice. The Employment Court ruled held the drivers were not in business on their own account because they couldn't set their own rates and fees, market themselves directly to customers or earn more money other than by working longer hours.
Uber appealed the Employment Court's decision & the Court of Appeal issued their judgment last week. The Court of Appeal decided that although there were technical (legal) errors in the Employment Court's decision - Nevertheless the outcome remained the same in that the drivers were found to be 'employees'.
While this judgment only directly impacts the four drivers involved in the case, the wider implications for Uber's workforce model are obvious since Uber drivers are all engaged on the same model via Uber's platform. Uber has released a statement saying they will appeal the decision to the Supreme Court, which is the highest court in New Zealand, so watch this space for further developments.
The Unions are saying they are assisting thousands of Uber drivers to file & seek wage and holiday pay arrears and are also in a collective bargaining process with Uber. They are also calling on the Government to abort their proposed Bill to prevent parties explicitly entering into an independent contractor arrangement and then later challenging it through the courts like what happened in this case.
There's said to be about 6000 registered Uber drivers in NZ, and if this decision remains this will certainly be defining for the Uber service as it stands. They can expect that every driver will become entitled to all minimum employment standards such as payment of at least the minimum wage for all hours worked and paid holiday and leave entitlements under the Holidays Act 2003. Former Uber drivers also may have grounds to claim unpaid holiday and leave entitlements for up to the last 6 years.
This latest legal judgment does not have any further ramifications for companies engaging contractors other than for Uber and the four workers listed in the case, but takeaways can be gleamed from the case in terms of key considerations and legal risks.
Our advice remains the same when engaging independent contractors; do your diligence and look closely at the relationship. If on balance it favours a contractor arrangement and the parties agree, get it documented and signed by the parties. To this end see our contractor agreements and guide on the subject in the
Library of your Employers Toolbox account. Non-members can purchase this separately here:
www.employers.co.nz/independent-contractors-agreement-product.aspx
If you are worried and wish to discuss the nuances of your particular situation please feel free to contact us.