New Zealand Update: Uber Driver Not An Employee

The Employment Court has found that an Uber driver was not an employee.

Background

Mr. Arachchige had previously worked as a taxi driver. He entered into a Services Agreement with Uber (the Agreement) in 2015. Mr. Arachchige completed 5,623 trips through the Uber Driving App as an “independent provider of peer-to-peer passenger transportation services” as per the Agreement. His access to the Uber Driver App was unilaterally deactivated when Uber received a passenger complaint. Having never received the details or been given the opportunity to respond to the complaint, Mr. Arachchige, sought a declaration from the Employment Court that he was an employee so that he could pursue a personal grievance for unjustified dismissal.

Decision

The Court’s decision focused on the definition of an “employee” in s 6of the Employment Relations Act 2000. To determine the ‘real nature’ of the relationship, the Court must consider all relevant matters, including matters indicating the parties’ intention. The Court found that the Agreement was not an employment agreement in substance nor in form. The Agreement expressly rejected the prospect of creating an employment relationship, and throughout its term, Mr. Arachchige, intended to and did, operate his business independently. Mr. Arachchige was able to engage in work for competing organisations, and he was not permitted to display any Uber or other signage on his vehicle or clothing. He supplied his own vehicle, smartphone, insurance and determined his working days, hours, and locations of service.

In the Court’s view, Mr. Arachchige had a considered understanding of the business model, and it was only after Uber terminated the Agreement that he sought to argue the relationship had been one of employment. Whilst Mr. Arachchige was subject to qualification requirements and performance expectations; these are not exclusive to employment relationships. Interestingly, the Court only touched lightly on the level of control Uber has over drivers when they are ‘on’ a trip. The Court rejected Mr. Arachchige’s principal argument for his employment status, being that the Uber model offered no opportunity to build a customer base, suggesting he could improve the profitability of his business in other ways.

On balance, the Court found that Mr. Arachchige was not an employee.

Comment

In its decision, the Court contrasted two recent decisions of the Employment Court, which found that a courier driver and four taxi drivers were employees. In both cases, the drivers were not found to be in business on their own account and were subject to significant control from the employing companies, for example, through pre-determined routes, set days/hours of work, limited holiday entitlements, and controlled vehicle arrangements. The Court contrasted this against Mr. Arachchige’s significant autonomy from Uber, and his understanding of his contractor status, unlike the employees in the other cases.

Uber’s operating model has been considered in the UK, France, and Australia (among other countries), with mixed conclusions. The Court discussed four Australian cases that held Uber drivers were not employees and UK Supreme Court decisions that found Uber Drivers were ‘workers’; a third category between the employment and contractor status (the ‘worker’ category is not present in New Zealand). Despite the fundamentally different legal landscape in the UK, the UK decision has attracted much comment in New Zealand media and more comment than this case, perhaps, indicating general public confusion as to employment status issues. The 2019/2020 Government discussion paper on better protections for contractors indicates that the result, in this case, could be subject to change, with potential legislative changes on the horizon. The UK approach may then be more relevant if protections for ‘dependent’ contractors are introduced, or even the third ‘worker’ status is adopted in New Zealand.

Quigg Partners, New Zealand, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact newzealand@transatlanticlaw.com

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