The New Zealand Employment Court has dealt Uber a significant blow in a case taken by four of its drivers, ruling that they are employees – not contractors.
Employment status confers statutory entitlements such as the minimum wage, minimum hours of work, rest and meal breaks, holidays, parental leave, domestic violence leave, bereavement leave and the ability to pursue a personal grievance. It also opens the door to union membership and collective bargaining.
Although the decision is confined to the four plaintiffs – two of whom drove for Uber Rideshare and two for Uber Eats – the Court found that it “may well have broader impact” not only within Uber but also on other companies running a similar business model.
Uber has indicated that it will appeal.
The factors the Court considered in determining the nature of the drivers’ contractual relationship with Uber were:
- 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 drivers’ work
- who exercised control over the way the work was conducted and when
- 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 plaintiffs identified as, and were identified by others as, part of the Uber business.
The decision wasn’t straightforward.
The Judge accepted that that the drivers could log in and out of the App at will, take time off and work any number of hours they wished within the limits set by law. They didn’t wear a uniform, didn’t have to accept work, often had other work (including for other ride share operators) and had their own equipment (car and cellphone).
However, these features were outweighed by the fact that, “stripped back to its fundamentals”, Uber was the only party running a business.
It was in charge of marketing, pricing and setting the terms and nature of the service provided to riders, restaurants and eaters. Uber did not, as it maintained, “simply connect individuals (the driver and the rider; the driver, the restaurant and the eater)”.
It created, dictated and managed the circumstances under which its business was carried out, and incentivised and deployed driver labour in order to grow that business – all of which pointed “firmly towards an employment relationship”.
Chapman Tripp comment
While the Court has purported to use the existing legal framework for assessing the ‘real nature of the relationship’, our view is that the decision adopts a different take and emphasis on that framework and it will have significant implications for businesses that rely heavily on the use of independent contractors.
It will be interesting to see how Uber fares in its appeal.