The tricky question of employee vs independent contractor

The question of whether someone is an employee, or a contractor, can have significant implications for both parties. This question has been hotly debated, and the Employment Relations Authority and Employment Court have landed at different decisions in respect of seemingly similar roles.

A good example of the nuances involved in answering the employee vs contractor question, is to examine the Court and Authority’s approach to driving roles. The year 2020 was a busy year for the Court in this space.

Firstly, the Employment Court found that a courier driver was an employee, because even though his agreement described him as a contractor, he was subject to a high degree of control and integration into the business (Leota v Parcel Express Ltd).

Shortly after, the Court found that a group of taxi drivers were employees because they were subject to significant control, carried modest risk, and were part and parcel of Southern Taxi’s business (Southern Taxis Ltd v A Labour Inspector).

Later in the year, the Employment Court found that an Uber driver was an independent contractor, because his agreement was a Services Agreement and operated in practice in accordance with that agreement (Arachchige v Rasier New Zealand Ltd). Unlike the earlier two cases, the driver had control over when and where he worked, and for how long. He provided all the necessary equipment to undertake the work, and was responsible for his tax obligations.

Following Arachchige, one may expect all drivers working within Uber-type platforms to be considered contractors. However, this year, the Employment Relations Authority found that a food delivery driver working for HungryPanda (a food delivery service operating via an app) was an employee (Wang v HungryPanda (NZ) Ltd).

The Authority distinguished the HungryPanda case from the Uber case, because it found that while the HungryPanda driver had a significant degree of choice over when and where he chose to work, HungryPanda’s model of business gave it significant control over the driver when he was actually at work. By contrast, Uber had very little control of drivers when they were working.

Key takeaways:

• The case law in this area makes it clear that whether a particular person is an employee, or a contractor, is a highly contextual question that will vary case-by-case.
• If in doubt, seek legal advice rather than relying on prior decisions, as seemingly similar roles can be categorised differently depending on the circumstances.