Summary
In E tū Inc & Anor v Raiser Operations BV & Ors (the latest Uber case) the Employment Court decided that certain Uber and Uber Eats drivers were not contractors, as their written agreement specified, but were actually employees.
Background
For many years, the pendulum has swung, about exactly where the border lies between the definition of a contractor (employed under a contract for services) and employee (employed under a contract of service).
There have been previous cases in New Zealand and overseas, about the employment status of Uber drivers, and different cases have resulted in different conclusions.
The plaintiffs in the present case were unions. The defendants were four companies within the Uber group. The people who were the subject of the litigation were four workers who drove for the various Uber companies.
The work had been operating on the basis that those workers were contractors. The Unions brought at application to the Employment Court, to have those workers declared employees.
There are various reasons why it can be very important to know whether someone is an employee or a contractors; for example, it determines whether the Employment Relations Authority has jurisdiction to hear a grievance raised by the workers, relevant to tax treatment, determines whether minimum employment standards apply, coverage of collective employment agreements and the relationship to the unions.
The unions sought the declaration so that the drivers could access the rights and protections under the employment law including the minimum wage, guaranteed hours, holiday pay, sick leave and the right to unionise and collectively bargain.
The Case
Tests
Traditionally, various tests have included – how the parties chose to define their relationship (what their written agreement said), tax treatment (including PAYE, GST and ACC), invoicing practice, whether the relationship was exclusive (if lots of clients, more likely to really be a contractor), whether the worker was expected to provide their own tools, how much freedom the worker had to choose where and when and how to work, whether payment is by results or by hours worked, whether the worker can sub-contract the work, and to what extent the worker was integrated into the business team. None of these consideration alone would necessarily be determinative.
Section 6 of The Employment Relations Act 2000 provided some assistance, stating:
In deciding … whether a person is employed by another person under a contract of service, the court … must determine the real nature of the relationship between them ... [and] …must consider all relevant matters, including any matters that indicate the intention of the persons; and…is not to treat as a determining matter any statement by the persons that describes the nature of their relationship.
The previous leading decision in this area was the 2005 Supreme Court decision in Bryson v Three Foot Six Ltd. In that case, the Supreme Court emphasised the importance of focusing on:
· The fundamental nature of the relationship, including terms of the written and/or oral agreement between the parties; and
· How the agreement operated in practice, including control and integration.
In this case, the Chief Judge acknowledged the Bryson decision is binding, but said the criteria were not intended to be exhaustive. She had regard to a wider set of criteria, which she stated were “infused” by the Bryson criteria, including:
· The nature of the business, and how it operates in practice,
· How the company’s business model impacted on those workers,
· Who benefited from the drivers’ work,
· Who exercised control, and how it was exercised,
· What the document between the parties said, and
· The extent to which the drivers were identified as part of the business.
Applying the Criteria in the Uber case
The Chief Judge applied the criteria to the facts, although much of the criteria overlapped (i.e. some facts appeared relevant to more than one criterion). She observed that:
· The contract that the workers had to sign reinforced a high degree of control and subordination in the relationship between the Uber companies and the drivers, including because the Uber companies retained control over fares, payment, review of disputed fees and information about passengers.
· The Uber companies exercised strong influence over when and how drivers worked, including by controlling and setting training, keeping the relationship limited to that driver (i.e. little or no ability to sub-contract), using a rating and reward system, and using a disciplinary system.
· The overall way in which the system worked was that the drivers were economically dependent on Uber (i.e. not the sort of economic independence you would expect when workers genuinely operate their own independent business) including because Uber was responsible for marketing and advertising, and the drivers’ ability to build up their business was limited to non-existent.
· There was some evidence that the drivers identified as Uber drivers, and associated with Uber.
· The fact that the workers provided their own cars, and set their own working hours, was not enough to show independence.
· The fact that their written agreements said that they were contractors, was not reflective of the reality of the relationship.
Result
The Chief Judge determined that the reality was that the drivers could not be considered to have been running their own independent businesses. The Employment Court make a declaration, that each of the drivers had been an employee for at least one of the Uber companies, during particular periods of time.
Have the goal posts just shifted? The debate among employment lawyers now includes questions such as:
· Was the Chief Judge following the factors from the Bryson case (even if she was using somewhat different terminology)?
· If the Chief Judge was not just following the factors from the Bryson case, was that okay (i.e. because the factors from the Bryson case were not intended to be exhaustive)?
The Court of Appeal granted Uber leave to appeal the Employment Court decision on 8 June 2023.
For further information on this case or similar issues, please contact Tim Blake, Consultant.
