Making driving your business: Employment Court finds Uber driver is an independent contractor

Privacy Act 2020 (“Act”) – Your increased obligations in 5 minutes or less (hopefully)
March 15, 2021
To Trust or not to Trust…that is the question.
March 19, 2021
Show all

The Employment Court recently held in Arachchige v Rasier New Zealand Limited & Uber B.V that a New Zealand Uber driver was an independent contractor and not an employee of Uber. The decision comes amidst a flurry of cases against Uber in overseas jurisdictions testing the employment status of Uber drivers. Although the Court stressed that the decision was “intensely fact-specific”, the decision is likely to have ramifications for Uber drivers in similar situations across New Zealand.

The case

Former Uber driver, Atapattu Arachchige, was deactivated from the UberDriver app in June 2019 after a passenger complaint. Uber claimed to have investigated the complaint, but Mr Arachchige disputed this, arguing that he was not provided with details of the complaint nor was he given an opportunity to respond.

Mr Arachchige wished to raise a personal grievance for unjustified dismissal but to do so he needed to first establish that he was an employee of Uber, rather than an independent contractor. Under New Zealand’s employment law framework, only employees can raise personal grievance claims or access the raft of entitlements and protections contained in the Employment Relations Act 2000 (the Act). Mr Arachchige therefore sought a declaration from the Employment Court that he was an employee of Rasier New Zealand Limited (part of the Uber group of companies).

The case turned on the definition of “employee” in s 6 of the Act. Applying the Supreme Court decision in Bryson v Three Foot Six, the Employment Court first examined the contract itself before looking beyond the contract’s strict wording to determine the ‘real nature’ of the relationship between Mr Arachchige and Uber. The Court found that whilst the contract included matters which might commonly be present in employment agreements such as qualification requirements and performance expectations, the contract was not in form an employment agreement and it expressly stated that Uber drivers were not employees.

The way the contract operated in practice also reflected a contract for service rather than an employment agreement. The Court noted that whilst drivers were integral to Uber’s business model, Uber had little control over the way drivers carried out their work. Uber did not dictate what vehicle drivers could use or the time and place where they could provide driving services. Significantly, Uber drivers are not prevented from working for competitors such as Zoomy or Ola. 

The Court distinguished the recent cases of Leota v Parcel Express Ltd and Southern Taxis v Labour Inspector, where a courier driver and taxi driver, respectively, were held to be employees. In contrast to Leota and Southern Taxis, the Court considered that Uber afforded its drivers far greater autonomy to make business decisions relating to the profitability of their driving services. Mr Arachchige was able to choose when and where he worked as well as what car, phone, data plan and insurance to use.

Taking into account these considerations, the Court held that the real nature of the relationship between Uber and Mr Arachige was one of independent contractor and principal rather than that of employee and employer.

Ramifications

Whilst Judge Holden emphasised that the case was “intensely fact-specific” and dealt only with Mr Arachchige’s situation, the decision is likely to have precedent value for Uber drivers in similar factual circumstances. In recent years, Uber drivers have regularly raised concerns about deactivation from the app. This decision will discourage those drivers from bringing cases against Uber in New Zealand (See article: https://www.rnz.co.nz/news/business/381328/deactivated-by-uber-they-re-going-to-listen-to-the-rider-and-not-listen-to-the-driver).

Despite the outcome in Mr Arachchige’s case, Uber drivers in New Zealand may have reason to be cautiously optimistic about the future after the UK Supreme Court held in February 2021 that UK Uber drivers are “workers” not independent contractors. This optimism must be tempered by a level of circumspection since the hybrid category of ‘worker’ that occupies the grey area between employee and contractor in the UK is not a part of New Zealand’s employment law framework. Whilst the Ministry of Business, Enterprise and Innovation (MBIE) released a Discussion Paper in late 2019 which included an option to introduce a new “dependent contractor” category, at the time of writing nothing further has come of this policy proposal (See discussion paper here: https://www.mbie.govt.nz/dmsdocument/7375-better-protections-for-contractors-discussion-document-for-public-feedback). 

Nonetheless, the UK decision signals that the story may not yet be over for New Zealand Uber drivers, and indeed it might just provide the impetus for an appeal of Mr Arachchige’s case. Watch this space.

Please note that this information is not a substitution for legal advice. If you have any queries relating to the employee/contractor distinction please get in touch with the employment team at Gaze Burt – we are happy to assist!

Leave a Reply

Your email address will not be published. Required fields are marked *