The Court of Appeal has granted rideshare company Uber leave to appeal a controversial Employment Court decision which found four of its drivers were employees of the business, rather than independent contractors.
Though the four had signed contracting agreements with Uber, they were now challenging that status, claiming they were effectively employees.
The case, Rasier Operations BV & Ors v E Tu Inc & Ors v [2022] NZEmpC 192 is among several highprofile actions taken here and in other jurisdictions, seeking clarification of the work status of those who have signed contracting agreements with employers but subsequently believed they should be reclassified as employees, with all the protections and benefits that entails, including the right to raise a personal grievance.
The Court of Appeal said it would consider argument on three questions of law:
- Did the Employment Court err by misdirecting itself on the application of s 6 (the meaning of ‘employee’) of the Employment Relations Act 2000?
- Did the Employment Court err by misapplying 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 err in finding that joint employment may arise in New Zealand simply because several entities are sufficiently connected and exercise common control over an employee?
The unions opposed the appeal application, saying the Employment Court made no errors of law “and closely analysed the evidence to reach the conclusions it did”.
Broader application
In granting leave, the Court of Appeal said as the first two questions involved the correct application of s 6,
they raise questions of law in the context of new ways and fast-moving changes to the way in which work is done.
The court also noted that while the Employment Court’s declaration applied only to the four drivers involved in the case, it could have broader impact for a large number of other drivers “where there is an apparent uniformity in the way in which the businesses operate and the framework under which the drivers are engaged….In the context of Uber businesses with multiple individual drivers who may be impacted by the decision, it is of general or public importance. It may have an impact on other businesses.”
A previous bid by an Uber driver to be reclassified as an employee failed (Arachchiga v Raiser NZ Ltd). But courier driver Mika Leota (Leota v Parcel Express Ltd) succeeded, as did builder Ross Barry (Ross Barry v CI Builders Ltd).
Legislative amendment
After the court released its decision to hear the appeal, the ACT Party said if it became part of the government, it would amend the Employment Relations Act to prevent workers who had explicitly signed up for contracting arrangements from challenging their status in the Employment Court.
ACT referred specifically to the “rogue” Uber decision, saying the Employment Court had become “increasingly unpredictable” and “activist”. In ACT’s view, the court tended to rule in favour of contractors who were seeking employment status and this was creating uncertainty for contractors and businesses.
Employment Court decision
In her decision in E Tu Inc & Ors v Rasier Operations BV & Ors, Employment Court Chief Judge Christina Inglis commented on the growing fragmentation, casualisation and globalisation of New Zealand’s workforce.
The key issue to be decided was to what extent the definition of “employee” in s 6 of the Employment Relations Act 2000 captured these new ways of working. So, within the context of a rapidly evolving labour market, are the plaintiffs within the range of workers the legislation was intended to protect?
Chief Judge Inglis said the Supreme Court’s binding ruling in Bryson meant she was required to consider all relevant matters when determining the nature of the relationship, not just the intention of the parties, as specified by Parliament and laid out in an agreement.
In the Uber case, this meant looking at the nature of the business and the way it operates; the impact of the business model and operations on the drivers; who benefits from the drivers’ work; who exercises control over the drivers’ work, the way it is conducted and when it is conducted; any indication of intention from Uber’s terms and conditions and other documentation between the parties; and the extent to which the four drivers identified as part of the Uber business.
Uber argued that through its app it was merely an intermediary and its Rideshare and Eats businesses simply facilitated a contractual relationship between the drivers and riders/eaters.
But Chief Judge Inglis said while the drivers were not required to front up to a physical workplace at a specific time, which might suggest they were not employees, other factors were more significant.
It was clear Uber dictated the contractual terms for drivers, who had to agree to its terms and conditions before they could use the app. Uber, and not the drivers, determined the cost of each trip. They were also subject to Uber’s direction and control in more subtle ways through its ratings system, incentive scheme, prompts, warnings and disciplinary system. The drivers had little or no ability to improve their economic position through their professional or entrepreneurial skills, Chief Judge Inglis said.
“Stripped back to its fundamentals, Uber is the only party running the business.”
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