The Chief Judge of the Employment Court issued a judgment last week which should send a strong seismic-like wave through the Uber companies and their like, taxi companies, probably the transport industry, and the so-called gig economy in general.
The Chief Judge issued a declaration that four Uber drivers were employees. The Court made it clear that while the judgment does not have immediate legal effect on the broader Uber operations, however it clearly indicates that it could have a broader potential impact on other Uber drivers given the apparent uniformity of the Uber business operation in New Zealand.
The Court explained that the Uber operation works as follows. Riders download the Uber App; they advise Uber (via the App) of where they want to travel to; Uber (via the App) offers the trip to available drivers; an available driver accepts the offer, collects the rider and drives them to their chosen location. Eaters download the Uber App; they select a restaurant and order their food (via the App); Uber (via the App) offers the food pick-up and delivery trip to available drivers; an available driver accepts the offer, collects the food from the restaurant and drives the food to the Eater at their nominated address for delivery. Riders and eaters make payment to Uber; Uber makes payment to the drivers. The five defendants are all separate legal entities but they all operate within the Uber group operation.
The starting point is the Employment Relations Act. In deciding whether or not a worker is an employee or a contractor the Court “must determine the real nature of the relationship”. In doing so, the Court must consider “all relevant matters, including any matters that indicate the intention of the persons” and “not to treat as a determining matter any statement by the persons that describes the nature of their relationship”.
The Employment Court highlighted the need to adopt a purposive approach to determining the status of the drivers, having regard to the applicable legislation and its role in protecting vulnerable workers and ensuring the maintenance of minimum standards. It said that the broader social purpose of the legislative framework must be kept in mind when considering whether a worker is an employee. The Chief Judge said that her task was to ascertain whether the individual is within the range of workers to which Parliament intended to extend minimum worker protections.
The Court accepted that some of the usual indicators of a traditional employment relationship were missing. However, it was found that significant control was exerted on drivers in other ways. These included incentive schemes that reward consistency and quality. Other controls included withdrawal of rewards for breaches of Uber’s standards such as slips in quality levels, measured by user ratings. Read more....