A landmark judgment in employment law has reaffirmed that Uber drivers are employees, and not contractors, under section 6 of the Employment Relations Act 2000 (Act). However, further changes to the test for employment status may not be far away. 

The Court of Appeal recently released its judgment for Rasier Operations BV v E Tū Inc [2024] NZCA 403, following Uber’s appeal of a decision by the Chief Judge of the Employment Court which found that Uber drivers were employees. 

Section 6 of the Act provides that to assess employment status, the court must “determine the real nature of the relationship” between the parties. While the Court of Appeal ultimately found that the Chief Judge’s decision was correct, it was found by the Court of Appeal that the Employment Court had:

• overly focused upon the perceived vulnerability of the drivers;
• failed to use the driver agreement as a starting point; and
• taken an incorrect approach to applying the common law tests that are used to help determine employment status.

Accordingly, the Court of Appeal found that the Employment Court misdirected itself in its application of section 6.

The Court of Appeal first looked at the real nature of the relationship by examining the mutual intentions of the parties, including the driver agreement. Little weight was placed on statements in the driver agreement about its nature. The Court found that the parties’ shared intentions were better indicated by various restrictive provisions, as well as the high level of control that Uber exhibited over the terms of the driver agreement. For example, the driver agreement prevented drivers from making decisions about the terms on which they would drive riders or from building up any form of personal business goodwill. Further, Uber had significant control over fares, driver fees, its policies and the information that drivers were provided with before accepting rides.

The Court of Appeal then applied the leading authority on employment status: the Supreme Court case of Bryson v Three Foot Six Ltd [2005] NZSC 34 and its three tests. This meant looking at:

• the control Uber had in the relationship;
• the extent to which drivers were integrated into the Uber business; and
• whether the drivers were effectively working on their own account or not (the fundamental test).

The Court found that although drivers had significant control of when and where they were able to work, when they were logged into the Uber app, Uber possessed a high level of control. For example, Uber punished drivers who ignored or declined requests by either unilaterally logging them out of the app, or providing them with warnings, suspending them and ultimately terminating them. Uber also heavily controlled the way in which the drivers provided their services, including fares and driver fees. The Court found that the level of control exercised while a driver is logged in was consistent with an employment relationship.

In applying the integration test, the Court highlighted that some of the traditional indicators of integration, such as uniforms, company signage or the business providing vehicles, were not applicable in this case. However, the Court stated that drivers were integral to Uber’s purpose as a passenger transport service provider and were the only customer-facing element of Uber’s business.  

Finally, when considering the fundamental test, it was found by the Court of Appeal that when a driver is logged into the Uber app, they generally have no opportunity to influence the quantity or quality of work they receive, or their revenue from rides. Again, the Court of Appeal found that it was critical that drivers had no opportunity to establish their own business goodwill.

After considering all factors, the Court of Appeal concluded that for the purposes of section 6 of the Act, Uber drivers were employees of Uber while logged into the Uber app. Employment status provides workers with a variety of entitlements including minimum wage, annual leave and the right to raise personal grievances.

This decision has the potential to open the gate to employment status for around 6.000 Uber drivers, as well as workers who operate under similar arrangements. However, the Court of Appeal was careful to note that because there is no single model for these kinds of online platform it is necessary to apply section 6 to each platform. 

A Legislative Response

While the Court of Appeal’s judgment is an authoritative reminder of the current employment status of Uber drivers, this may change under a proposed amendment to the Act announced by the Government shortly after the judgment was released.  Under the proposed amendment, workers would be deemed contractors if:

• a written agreement exists between the organisation and the worker;
• the organisation does not restrict the worker from working for another organisation, including competitors;
• the organisation either:
  • does not require the worker to be available to work on specific times of day or days, or for a minimum number of hours; or alternatively
  • the worker is able to sub-contract their work; and
• the organisation does not terminate the contract if the worker does not accept an additional task or engagement.

The Government is intending to introduce the amendment bill which would make these changes in 2025.

As ever, employment law remains a dynamic area of law. Employers and workers alike should continue to pay close attention to this space, in order to stay alert to future developments.