Tim joined Frank Ogilvie in 2022 as a Consultant.
He graduated with a Master of Laws from Victoria University of Wellington in 1991. He spent over 20 years in private practice working across sole practice and mid size firms, before spending nine years working in-house.
In private practice, Tim was involved in a mix of civil and criminal litigation, and employment law. Tim also taught as a lecturer at the University of Waikato and the Open Polytechnic, and as an instructor for the Institute of Professional Legal Studies.
As well as working for Frank Ogilvie, Tim is General Counsel for Hospitality New Zealand.
In his personal time, Tim likes to learn new things (for example, in 2019 he completed a postgraduate management course). He also enjoys spending time with friends and family, and never says no to a coffee.
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.
A massive change for industrial relations in New Zealand passed in Parliament this week. Most of The Fair Pay Agreements Act 2022 will commence on 1 December 2022,with some aspects coming in to force on 1 June 2023.
Background
The Fair Pay Agreement (“FPA”) regime is based on a design from a working group led by former Prime Minister Jim Bolger.
The FPA regime is also very loosely based on Australia’s modern awards system. However, bargaining is front and centre in the FPA system, but is not in the Australian modern awards system.
It involves a change from employment agreements between individual employers and employees setting our the main terms of employment, to a system of compulsory national collective bargaining and awards. The bargaining will be undertaken between unions and organisations representing employers (and, when that doesn’t work, set by the Employment Relations Authority).
The Act was championed by Workplace Relations Minister Michael Wood, who argues that worker pay and conditions haven’t kept pace in recent decades. Labour claims that the FPA regime will lead to better pay and conditions, especially for low-wage sectors. They also claim that it will be good for business, in that it will stop responsible business being undercut on labour costs by “cowboys”.
Submissions to the Select Committee that considered the Fair Pay Agreement Bill tended to be quite polarised.
Overwhelmingly, unions and people writing as a consequence of being union members supported the Bill. They argued that it would reduce unfairness and exploitation in the workforce, and lead to improvements in wages and conditions that they believe employers can afford.
Overwhelmingly, employers and organisations whose members are businesses/employers opposed the Bill. Their arguments included that:
· The Bill took a “one size fits all” approach to employment terms and conditions, which would be hard for many small businesses to comply with.
· The Bill would lead to unaffordable wage increases, which would increase inflation and unemployment.
· The process set out in the Bill was much too complicated, slow, expensive and unwieldy, would prevent businesses from being flexible, adaptable, and would detract from productivity.
How it works
It will potentially apply to all employees and employers. Workplaces are not exempt because they are not unionised, or because the employer does not belong to an employers’ organisation. It will apply to employees, whether they are union members or not (although some high paid senior employees will not need to be covered).
Each fair pay agreement must include:
· The date when the agreement starts.
· Who is covered.
· The minimum base wage rates.
· Standard hours during which the base wage rate applies
· Overtime rates(and when it applies).
· Penalty rates(and when it applies).
· The arrangements for training and development.
· Leave entitlements.
· When the agreement expires.
Other things that a FPA may cover, but that must at least be discussed, include:
· Health and safety requirements.
· Arrangements for flexible work.
· Arrangements relating to any redundancy.
FPAs will also cover differences between types of workers who are covered (e.g. different qualifications or occupations). In some cases, they can also allow for regional differences (e.g. pay rates might be higher or lower in different parts of the country).
FPAs will last 3 to 5 years. Employers who breach an FPA could be fined, or even prohibited from employing people.
FPAs will not necessarily be the last word, in setting terms of employment. Sometimes, they will just provide minimum terms, and workplaces will need to negotiate deals with their workers that build on what is already in the applicable FPA (second tier bargaining). Likewise, FPAs will not revoke existing individual or collective employment agreement.
There is a lot uncertainty around the finer detail and practicalities of how the FPA regime will actually work in practice. The FPA process is complicated, so it can be easier to break it into three stages, which are – initiation bargaining, bargaining and finalising. Unions, employer organisation, MBIE and the Employment Relations Authority (“the ERA”) will all have a major role in the process.
The process is as follows:
The bargaining process will be initiated by unions.
MBIE get to decide whether to approve the unions application to bargain, and it may call for public submissions. Criteria include whether the union has the support of 10% of the employees who would be covered, or the support of 1,000 employees, or public interest criteria are met.
If the union’s application is approved, there will be a process for notifying workers and other unions, and for passing on employee details to unions.
There will also be a process for other unions and employer organisations to apply to be bargaining parties.
If bargaining parties can’t be found, the process will be referred to the Employment Relations Authority.
If bargaining parties are found and approved, MBIE publishes a notice announcing the process is underway.
Once the process is underway, unions get greater access to workplaces, and the parties can request information from each other.
The parties will get down to bargaining and try and reach an agreement (covering off at least the things that must be in a FPA). Dispute resolution assistance from MBIE is available.
If the parties can’t reach an agreement, the ERA sets the terms.
If the bargaining parties come up with an agreement, they submit it to the ERA for vetting. If the ERA does not approve, they send it back to the bargaining parties, for them to resolve whatever it was that caused the ERA not to approve.
If the ERA does approve the proposed agreement, the bargaining parties send it to employees and employers, for them to vote to ratify. There are two chances to approve by ratification vote. If they vote “no” both times, the ERA sets the terms.
If the verification vote is “yes,”, then the parties submit the agreement for a final check with MBIE (focusing on checking for overlap with other FPAs). MBIE deals with overlap issues, and passes a legal instrument called a “notice” that gives the FPA binding legal force.
It is unclear how long the whole process will take, but it could take months, or over a year.
If you would like any further information on Fair Pay Agreements, or other employment matters, please contact Consultant Tim Blake.
