News & Thinking
Uber allowed to appeal decision on driver employment status
The issue of whether gig workers are employees continues to work its way through our Courts.
On 8 June 2023, the Court of Appeal granted Uber the right to appeal the Employment Court’s landmark case of E Tu inc v Rasier Operations BV determined in October 2022, when Chief Judge Inglis ruled that four Uber drivers were employees rather than independent contractors.
In that case, the Uber drivers took the ride-share company to court seeking a declaration that they were employees and therefore entitled to rights and protections under New Zealand employment law, such as minimum wage, holiday pay and KiwiSaver. The Employment Court ruled that the drivers were employees because Uber exercised direction and control over them and that they were not in business on their own account, as they couldn’t set their own rates, market themselves directly to customers or earn more money other than by working longer hours. Chief Judge Inglis also upheld a finding that joint employment was possible under the Act, and that three of the drivers were, at times, jointly employed by different Uber entities.
The Court of Appeal has granted Uber leave to appeal the following questions of law:
- Did the Employment Court misdirect itself on the application of s 6 (the meaning of “employee”) of the Employment Relations Act 2000?
- Did the Employment Court misapply the test in s 6 or, in the alternative, was the Court’s conclusion so insupportable as to amount to an error of law?
- Did the Employment Court make a mistake in finding that joint employment may arise in New Zealand simply as a result of a number of entities being sufficiently connected and exercising common control over an employee?
In granting Uber leave to appeal, Justice Jillian Mallon determined that the first two challenge points raised questions of law regarding the new ways we are working and how quickly that is evolving. In other words, recognising the evolution of New Zealand’s gig economy and that our legislation may no longer be fit for purpose. Justice Mallon also recognised that in the previous New Zealand Employment Court case of Arachchige v Rasier New Zealand Limited, an Uber driver was found to be an independent contractor not an employee, and that there have been “mixed results” in other jurisdictions.
The third question raised an issue of law regarding what factors determine whether there are joint employers. All of these issues are of general public importance with multiple Uber drivers as well as other businesses likely to be impacted by the decision.
Chief Judge Inglis was quick to point out in her 2022 ruling that there was no immediate legal impact for other Uber drivers as a result of her decision. In other words, this decision did not make all Uber drivers employees. But both Inglis and Mallon acknowledged in both judgements that the Courts’ decisions were likely to have a broader impact for other drivers where there was an apparent uniformity in the way in which the businesses operated and the framework under which the drivers were engaged; signalling that once determined, the case would be precedent setting for the way in which workers in similar organisations are treated.
Making comments in recent media interviews, First Union and Uber New Zealand seemingly agree that there needs to be legislative amendments to afford better protections to gig workers in New Zealand. In 2021, the Government mirrored this view and established a working group tasked with suggesting amendments to legislation to make the distinction between employees and contractors clearer. However, in March 2023 the Government disappointingly deferred back to the courts pending the Uber appeal, placing any planned law reform on hold.
A date has not yet been set for the appeal. While we wait for the date to be announced, we recommend that companies with gig workers/independent contractors consider how a decision either way might impact them.