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UBER DECISION – the Employment Court's latest word on the contractor/employee issue

Home Insights UBER DECISION – the Employment Court's latest word on the contractor/employee issue

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Contributed by: Kylie Dunn and Emma Peterson

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Published on: October 25, 2022

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As you may have seen from media reports, the Employment Court issued its judgment in the Uber driver status case today (25 October). This is the most recent development in a line of cases on whether an individual is an independent contractor or an employee.

The Employment Court considered the position of four drivers (a mix of Uber and Uber Eats drivers) and found that they were employees. The Court's judgment (by Chief Judge Inglis) can be found here and the Court's media release here.

The Court's decision

Cases regarding status apply section 6 of the Employment Relations Act, which requires a consideration of the 'real nature of the relationship' between the parties. Previous cases have considered this test by assessing the parties' intentions, the degree of control exercised over the worker, the extent to which the worker was integrated into the organisation and the extent to which the worker was in business on their own account (a four part test previously endorsed by the Supreme Court).
 
Taking a subtly different approach to previous decisions, the Court assessed the 'real nature of the relationship' by considering the following matters (noting that features of direction, control and integration were "infused" in each):

  • The nature of Uber's business and the way it operated in practice

  • The impact of Uber's business model and its operation on drivers

  • Who benefitted from the work undertaken by drivers

  • Who exercised control over drivers' work, including the way in which control was exercised, when and how

  • Any indications of the parties' intentions including in the documentation signed by the parties

  • The extent to which the drivers were identified as part of the Uber business.

The above should not be looked at as a new test for establishing whether a worker is an employee or a contractor. Rather, it is the Court applying the existing four part test to a particular factual context.

Key factors in the decision

The following can be taken from the Employment Court's decision:

  • The Court emphasised the importance of the relationship between the parties (ie how they dealt with each other in practice) rather than how the contract described the relationship. This included assessing control not just on whether drivers were required to work at particular times (they were not), but also how the Uber system motivated or incentivised drivers and how the drivers perceived their relationship. For example, even though drivers were not required to work at any particular time (or, indeed, at all), electing not to work would mean they lost access to useful information around matters like passenger destination.

  • The reason for the control was found not to be relevant (ie whether it was for business efficiency, customer service or regulatory compliance).

  • In considering the extent to which the drivers were integrated into Uber's business and whether drivers were in business on their own account, the Court asked the question: "in whose interests is the work done?". Reframing the test this way de-emphasised the fact that drivers provided their own equipment and emphasised the fact that those costs had been shifted to drivers. The fact drivers could increase earnings by working longer hours was discounted as not relevant to the analysis.

  • The Court found that various Uber entities were joint employers. This remains a novel concept under NZ law and this is one of the first cases to reach a conclusion of joint employment. It will be interesting to see if this has impacts for organisations without clear boundaries between legal entities.

The final paragraphs of the Court's judgment make clear that the case only relates to the four plaintiff Uber drivers and not all Uber drivers or all drivers (or all contractors) generally. However, it is another decision in an ongoing trend where contractual (independent contractor) relationships between parties have been re-cast by the Employment Court using the section 6 'real nature of the relationship' test. While the Court has said it continues to use the same four part legal test, it has now included a gloss on that test which includes factors such as "in whose interests is the work done?". In short – this decision makes it more likely that independent contractor relationships (especially with drivers) will be found to be employment relationships if challenged.
 
Please feel free to get in touch with a member of the team if you would like to discuss this matter further.

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