Jenni McManus
Four Uber drivers who took the rideshare giant to court to challenge their work status have won a three-year battle to be classified as employees.
The Supreme Court on Monday unanimously dismissed Uber’s claim that the drivers did not work for the rideshare platform or, alternatively, were independent contractors running their own businesses. The court said it agreed with the findings of both the Employment Court and Court of Appeal – that the drivers were Uber’s employees – though their reasoning was different.
“The court unanimously found that Uber does engage drivers to deliver passenger transport services to riders. There is no contact between rider and driver until after Uber has offered the rider a fare for the trip and the rider has accepted that offer,” said Justice Forrest Miller, delivering the judgment.
“Riders and drivers effectively cannot select one another. They are also practically anonymous vis-à-vis one another throughout the entire transaction. Uber earns its revenues by charging riders for trips. Uber also decides how to resolve any difficulties that may arise between rider and driver during a trip. A passenger cannot reasonably be expected to think they are contracting with the driver when they get into the car.”
Miller said the court needed to give no weight to the terms in Uber’s contract as they disguised the “reality of the relationship” between the company and the drivers.
Select committee investigates
The Supreme Court’s decision comes as Parliament’s Education and Workforce select committee ponders the highly contentious Employment Relations Amendment Bill which includes a gateway test to determine whether workers should be classified as contractors or employees.
The test, widely viewed as a response to the Uber drivers’ court challenge, is designed to give certainty and flexibility to both employers and employees, said Workplace Relations Minister Brooke van Velden when the bill was introduced to Parliament earlier this year.
The minister denied she “worked for Uber”, after LawNews revealed that she had adopted almost verbatim the rideshare giant’s suggestions for reforming that section of the bill.
The select committee was due to report back to Parliament on Monday – the same day as the Supreme Court’s decision – but this has been rescheduled for release on Christmas Eve.
Prime Minister Christopher Luxon was non-committal when asked about the Uber decision.
“It’s a court ruling that’s only just come through. We need some time to digest and that’s something that Minister van Velden will be looking into very closely,” he told reporters.
Vulnerability
Turning to the decision itself, the Supreme Court agreed with the Court of Appeal that the inequality of bargaining power between Uber and the drivers could not expand the meaning of the term “employee” in s 6 of the Employment Relations Act 2000.
To that extent, the Supreme Court said, the Employment Court Chief Judge Christina Inglis had erred with her focus in vulnerability, but inequality of bargaining power might explain why Uber’s driver contracts do not reflect the real nature of the relationship.
Under s 6, the court must determine this “real nature”, and in doing so is required to consider all relevant matters, including any that indicate the intentions of the parties. Labels and descriptors of the relationship, however, are not decisive. And, as the Court of Appeal noted in its decision, “The court cannot modify the test to respond to concerns about the vulnerability of the platform workers who are not employees as defined under s 6.”
Declaration sought
Et Tu and First Union, on behalf of the four drivers, have been seeking a declaration that the drivers are Uber’s employees once they’ve signalled their availability for work and logged onto the Uber drivers’ app.
The company has now lost in all three courts: the Employment Court, the Court of Appeal and the Supreme Court.
Uber has consistently denied it hires drivers to work for hire or reward and says it does not provide passenger transport services. Rather, its standard form contract with drivers and riders says Uber simply supplies a digital platform that enables drivers and riders to connect with each other and create their own business relationship.
If the court were to reject that position, Uber says it engages drivers as independent contractors, not employees.
The Supreme Court noted that Uber claimed not to control the drivers, who choose their own working hours and may work through competitor platforms. The company also said Uber does not integrate the drivers into its business and they effectively operate their own businesses.
But the Supreme Court said that wasn’t the whole story.
The process
Turning to the issue of process and the correct approach to determining the status of the drivers, three judges – Chief Justice Helen Winkelmann and Justices Joe Williams and Forrest Miller – said the court would normally first establish the terms of the contract and examine its workings in practice before deciding whether the real nature of the relationship was one of employment.
This differs markedly from the approach taken by Chief Judge Inglis in the Employment Court who gave less emphasis to the parties’ contractual documentation and their rights and obligations, and focused instead on the drivers’ vulnerability. Though she came to the same conclusion as the higher courts, Inglis said the question to be asked and answered was whether s 6, construed purposively, was intended to apply to the relationship at issue “when viewed realistically”.
Inglis found that the opportunity for the drivers to grow their own businesses was “effectively non-existent”. They could not set their rates and were banned from contacting passengers directly. They were not free to organise their own work, apart from when or if they logged onto the app. There was little or no ability to improve their commercial position through developing their professional or entrepreneurial skills.
“These features of the relationship stand in marked contrast to those that usually apply to a person who operates their own business,” Inglis said. “Stripped back to its fundamentals, Uber is the only party running a business…..The Uber business is reliant on drivers providing personal services to be performed as directed by Uber.”
Not wrong
The three Supreme Court judges also held that the Court of Appeal did not misinterpret the meaning of the word “employee” (as had been claimed), nor did they misinterpret the Supreme Court’s landmark decision on s 6, Bryson v Three Foot Six.
Nor were the courts below wrong in their findings.
First, the three judges said, “Uber exercises very close control over every aspect of the drivers’ delivery of its passenger transport services. It chooses how they perform, including route selection. It monitors their performance and it polices their behaviour. It exercises control while they are on the app, not merely in the period between acceptance and completion of trips.”
Second, while the drivers are not integrated into Uber’s business in the traditional sense of having to attend its premises, wear uniforms and submit to HR supervision, once it is accepted that Uber delivers passenger services to riders, “drivers must be considered integrated in a substantive sense. They are the face of Uber’s business and the relationship between Uber and its drivers is one of co-dependence.”
Third, the Supreme Court said, while there are some indications that the drivers are in business on their own account, “their lack of control over the quantity and quality of work they receive and the price they are paid for it, and their inability to build goodwill, points strongly to the conclusion that they are not independent contractors. Accordingly, the courts below did not err by finding that the four drivers were Uber’s employees.”
Uber was ordered to pay the respondents one set of costs of $50,000.
Read the Supreme Court’s decision here.
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