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Uber drivers won a second important battle when the Court of Appeal found unanimously that they are employees under the Employment Relations Act 2000. But they may yet lose the war as the Government is promising legislation that will settle the position in Uber’s favour.
Government announcement
Workplace Relations and Safety Minister Brooke van Velden announced at the weekend (Sunday, 15 September) that the Government hopes to introduce a Bill next year to, among other changes, provide a “gateway test” businesses can use to respond to claims around whether a person is an employee or a contractor.
The four criteria to be applied will be:
- A written agreement specifying that the worker is an independent contractor;
- A lack of restrictions on the person from working for another business or businesses, including competitors;
- No requirements on the worker to be available for work on specific times of day or days, or for a minimum number of hours, or an ability for the worker to sub-contract the work; and
- Flexibility for the worker to refuse an additional task or engagement without risking having their contract terminated.
Van Velden said this would provide more certainty to businesses to use “innovative business models involving contractors”.
Court of Appeal
The Court of Appeal accepted that there were a number of factors to support Uber’s submission that their drivers were contractors working on their own account. They decided where and when to work. They provided their own car and phone and met associated costs such as data and insurance. And they could improve their earnings by responding to Uber’s incentive structure and working in the places and at the times where surge pricing was on offer.
But, when looking at the “realities of the relationship, rather than the form of driver agreement designed by Uber”, it was “tolerably clear” that the drivers were not able to make the types of decisions that an independent business operator would normally make or to bear the risks and rewards of those choices.
“The critical point is, we think, that while a driver is logged onto the driver app that driver has no opportunity to establish any business goodwill of their own, or to influence the quantity of work they receive, the quality of the work they receive, or their revenue from that work except to the extent that Uber agrees to give them some preference in relation to access to ride requests, information about rides, or supplementary payments”.
Other findings were:
- That drivers couldn’t repeatedly ignore requests because they would be logged out and, if the pattern persisted, subject to warnings, suspensions and – ultimately – termination
- Once a ride is accepted, Uber reserves to itself the ability to control almost every aspect of the service provided to the customer and the payment for those services, and
- The agreement with the driver and all addenda and binding policies are determined by Uber on a non-negotiable basis.
The Court acknowledged that Uber had a lot riding on the outcome as First Union has filed minimum entitlement proceedings with the Employment Relations Authority on behalf of around 900 Uber drivers, all of which depend on their employment status.
Although the Court of Appeal arrived at the same verdict as the Employment Court, it was critical of the Employment Court’s application of the test set out at section 6 in the Employment Relations Act, saying:
“It is difficult to escape the impression that the vulnerability of drivers vis-à-vis Uber, and a perceived need for them to enjoy the protections available to employees, paid a significant part in the Chief Judge’s conclusion that the drivers were employees.
“That approach risks eliding the role of the courts – interpreting s 6 in light of the guidance provided by the Supreme Court in Bryson – with the role of Parliament in determining whether some or all of the ERA protections should be expanded to vulnerable workers who are not employees”.
What next?
Uber has said it will appeal to the Supreme Court, which will be interesting as the Court of Appeal relied very heavily on the Supreme Court’s interpretation of section 6 in Bryson v Three Foot Six Ltd.
It is possible, given court timeframes, that the Government’s proposed legislation will have been introduced before the Supreme Court issues any decision.
