Neil Sands
Officials advised Workplace Relations Minister Brooke van Velden against restricting workers’ ability to challenge their employment status in court, but she ignored them and instead adopted almost verbatim law reforms drafted by Uber, government documents reveal.
The Employment Relations Amendment Bill, which includes a “gateway test” to determine if workers should be classed as contractors or employees, passed its first reading in Parliament on Tuesday.
Brooke van Velden
Van Velden told Parliament the bill will give greater certainty to both employers and workers, as well as provide flexibility to those involved in the gig economy. “Currently, a contractor can challenge their employment status in law despite being a contractor,” she said. “This creates uncertainty and extra costs for business, potentially placing at risk various business models that use contracting arrangements.”
The introduction of the gateway test has been widely seen as a response to a landmark court decision, currently being appealed in the Supreme Court, that four Uber drivers should be classified as employees, not contractors.
While the decision applies only to the four Uber drivers who brought the court action, unions say it sets a precedent that potentially allows other gig workers access to rights such as minimum wages, rest and meal breaks, leave and the ability to pursue a personal grievance.
Exploitation fears
Van Velden’s media statement hailing her bill’s first reading contained footnotes that linked to a range of documents, including a regulatory impact statement (RIS) prepared by MBIE on “providing greater certainty for contracting parties”.
In the RIS, MBIE considered six options for changing contracting arrangements, noting it had been asked to focus on option two, containing the gateway test.
But officials rejected all the options for change and recommended maintaining the status quo, where the employment relationship is defined under a test contained in s 6 of the Employment Relations Act, which has been the focus of the ongoing Uber case.
“The test will continue to evolve under the common law,” the RIS said.
Officials said the impact of excluding workers from being classified as employees under the gateway test was difficult to predict.
Employers could potentially take on more contractors as they had greater certainty about hiring arrangements, or they could restructure their businesses to reclassify existing casual employees as contractors, drastically reducing their employment benefits.
“We give greater weight to the possibility that an exclusion could increase risks of exploitation for workers, compared with the potential benefits of increased certainty for businesses. Given the uncertainties regarding the costs and benefits of options 2 to 5, we prefer the status quo.”
All advice contained in the RIS about whether the changes were consistent with New Zealand’s international obligations was redacted, citing “legal privilege and international relations”.
Uber’s retrospective objective
Van Velden’s statement also linked to a briefing note for a meeting she held with Uber on May 1 last year, when the Court of Appeal had not yet ruled on the Employment Court’s decision that the four drivers were employees.
It outlined the legal action and said Uber had supplied a four-part test that could be included in the Employment Relations Act to determine if a worker was a contractor or an employee.
“We will consider Uber’s proposal in future advice we prepare for you,” the note said.
Not only did the government consider Uber’s proposal, but it also adopted the written draft wholesale with only minor tweaks, including it as the gateway test that is now the flagship reform of the Employment Relations Amendment Bill (see side-by-side comparison below).
However, Uber did not get everything it wanted. The rideshare giant suggested the changes should be retrospective but received short shrift in the briefing note prepared by MBIE.
“The presumption for New Zealand legislation is that it does not alter the legal status of past conduct because this removes certainty around the legal status of the current conduct,” it said.
“As a result, retrospective legislation is rare in New Zealand and considered appropriate in very limited circumstances.”
The proposed legislation has been referred to the Education & Workforce Select Committee, with a report due by November 17.
“I am looking forward to hearing what New Zealanders have to say about the bill during the select committee process,” van Velden said.
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