Key Takeaways and Next Steps for Businesses Using Contractor Models
Recently, New Zealand’s Supreme Court delivered a unanimous decision that four Uber drivers are employees (not independent contractors) under the Employment Relations Act. This decision brings to a close a high-profile legal battle over the employment status of rideshare drivers.
The journey to the Supreme Court
This legal saga started back in 2021 when four drivers, backed by E Tū and Workers First unions, took Uber to the Employment Court seeking recognition as employees under section 6 of the Employment Relations Act. The Employment Court sided with them in 2022, finding they were under substantial control and weren’t running genuine independent businesses. Uber appealed to the Court of Appeal, which upheld that decision in 2024. When Uber pushed on to the Supreme Court, the country’s highest court granted leave on the central question: are these drivers employees? See our previous articles following this case.
What swayed the Court
The Supreme Court looked past the paperwork to examine what the relationship between Uber and its drivers actually looks like day-to-day. Several factors proved decisive.
First, there’s the matter of control and integration. Uber sets the fares, tracks driver performance through ratings, and enforces its policies. The drivers aren’t operating on the periphery of Uber’s business, they are the business, or as the Court put it “the face of Uber’s business.” Uber also takes its cut from each fare before drivers see a cent.
Then there’s the gap between contract and reality. Sure, Uber’s agreements label drivers as independent contractors, but the Court saw this as “take-it-or-leave-it” language masking what’s really going on. Yes, drivers own their cars and can log on whenever they want (traditional hallmarks of contractor status), but these factors didn’t override the control Uber maintains.
The passenger relationship sealed the deal. When you book an Uber, you’re not really choosing your driver or contracting with them directly. You’re contracting with Uber. The Court recognised what most of us already know from experience: people see Uber as a transport company, not a neutral middleman connecting independent drivers with passengers.
So what does this actually mean?
For the four drivers in this case, they now have access to the full suite of employment protections: minimum wage, paid leave, rest breaks, KiwiSaver contributions, and the right to bring personal grievances.
There’s an interesting tax wrinkle here too. The Court noted that these drivers probably filed returns as contractors, claiming vehicle expenses and the like. As employees, those deductions would typically be off the table, which could create some messy retrospective issues.
But the bigger story is what this means for the gig economy more broadly. This decision forces some uncomfortable questions: What counts as “working time” when someone’s toggling between multiple apps? How much control can a platform exert before it crosses the line into employment? Could platform companies be jointly liable if workers are simultaneously logged into several apps?
What should businesses be doing?
If you’re running a business that depends on gig or app-based workers, now would be a good time to consider the following:
- Review working arrangements: Audit the contractual relationships with your workers. Check whether you’re relying on contractor labels or whether the nature of your system actually suggests employment.
- Evaluate control mechanisms: Look closely at the degree of control you retain over work: how you set prices, monitor performance, and enforce rules. The nature of that control matters for legal risk.
- Consider employment risk: There may now be higher risk of claims for employment entitlements (pay, leave, grievances). Consider how you will manage or mitigate that risk — through restructuring, renegotiating contracts, or changing business models.
Finally, whilst the Supreme Court’s decision puts this issue to bed, we note that the Employment Relations Amendment Bill is slowly making its way through Parliament which may change the position again. It introduces a new “gateway test” with four core criteria (plus a mandatory advice step) that would allow someone to be treated as an independent contractor without challenge if they meet all of the following:
- The worker must have a written contract calling them a contractor
- Be free to work for others (except when actually working for you)
- Not be required to be available at set times and be able to subcontract work or at least not be bound to do it personally
- Not face termination simply for declining extra work; and
- Have had a genuine opportunity to get independent advice before signing.
However, if any one of the criteria is not satisfied, the worker may bring a claim, and the traditional common-law tests of “control,” “integration,” and “fundamental” would apply.
If you think this decision may affect you or your business, we recommend contacting our Employment Team.
This article was written by James Hakaria and Kate Bennett.