In a marked change from the position adopted by the same court in 2020, the Employment Court on 25 October 2022 found that four Uber drivers were employees, not independent contractors.
The Court took a purposive approach, examining the broader social purpose of the legislative framework in the context of a rapidly evolving labour market, and asked whether the plaintiffs were within the range of workers that Parliament intended be protected by minimum worker protections.
In the context of the Uber case, the Court identified the following matters as being relevant to assessing the real nature of the relationship between Uber and the drivers:
- the nature of the Uber business and the way it operated in practice;
- the impact of the Uber business model and its operation on the plaintiff drivers;
- who benefitted from the work undertaken by the plaintiff drivers;
- who exercised control over the plaintiff drivers’ work, the way in which it was conducted and when and how it was conducted;
- any indications of intention, including what can be drawn from the nature, terms and conditions of the documentation between the parties; and
- the extent to which the plaintiff drivers identified as, and were identified by others as, part of the Uber business.
Uber’s position was that both its rideshare and eats businesses were matchmaking services, facilitating contractual relationships between others (i.e. between a rider and a driver; or between a restaurant, eater and driver), and as such, it was not the plaintiffs’ employer.
After examining the evidence, the Court rejected this argument and found that:
- Uber exercised a very high degree of control over the drivers. Examples of this control included that:
- Uber dictated the contractual terms under which the drivers performed the services. The drivers could not use the Uber app unless they agreed to the terms and conditions Uber had set, and which Uber can, and does, vary.
- Access to the Uber app is non-transferable – the drivers were not allowed to share their accounts with anyone else, and were obliged to provide personal services (i.e. could not sub-contract their work).
- Uber determines the fare for each trip and charges this to the customer. The customer pays the fare to Uber directly, and then Uber passes this on to the driver, minus a service fee which Uber also determines.
- Uber may, in its sole discretion, change the fare or fare calculation at any time, review or cancel a fare, or make a full or partial refund to a customer.
- If a driver wishes to have a fare reviewed, this must be done via Uber and is at Uber’s discretion.
- Uber determines if and when to add “surge” or “boost” pricing.
- Uber applies incentives for working during peak times and accepting rides, and disincentives (e.g. withholding access to rewards, deactivating accounts) for letting ratings slip or not accepting rides.
- The drivers were working for Uber’s interests and were integrated into its business because:
- They were prohibited from contacting any passenger or using their information made available via the App or otherwise.
- They had essentially no opportunity to grow their business. The only way they could increase their earning was to work longer hours while meeting Uber’s requirements.
- They obtained work via Uber and its brand, and were known as “Uber drivers”.
- If a rider soiled a vehicle, the cleaning fee was only recoverable by Uber in its sole discretion.
- There was no evidence they advertised or promoted their own businesses via the work they did while logged in to the Uber app.
- They were not free to organise their work other than when and if they logged in and the rides they accepted or declined, and the choices they made were under the shadow of adverse consequences imposed by Uber.
- While they had some flexibility and choice as to their hours of work, this is becoming a feature of modern employment relationships. Casual employees, for example, enjoy a lot of flexibility and choice as to when they work, but this does not change their status as an employee.
- They had no control over prices, marketing, service standards, the complaints procedure, and substitute labour.
- Uber was reliant on the drivers providing personal labour.
- They were engaged by Uber for an indeterminate period of time.
- Their work did not require special expertise or skills, or financial risk.
- While they did provide their own vehicles and smartphones, this was was a neutral factor. Most adults in New Zealand have access to a car and smartphone, and the plaintiffs actually owned their vehicles before considering driving for Uber. It therefore could not be said that this was an investment into running their own businesses.
- While some of the drivers were working other jobs, this did not mean they were not employees of Uber, as it is not uncommon for people to work multiple jobs.
- TradeMe is not an analogous business model as it does not set prices or play a material role in how the transactions are performed, or in what is bought/sold. Sellers can work to obtain a greater share of the market by their pricing and marketing decisions.
- The contractor agreement was not determinative, because in addition to the above:
- The contract was prepared by Uber without any input or negotiation with the drivers; was presented on a ‘take-it-or-leave-it’ basis; and was long, in small font, and not in plain English;
- Drivers were given the contracts to sign hurriedly and were not advised or encouraged to get legal advice;
- None of the drivers read the contract before signing and it appeared reading it would unlikely have made any difference;
- The documentation was amended from time to time by Uber and the amendments were communicated to the drivers via the app (meaning they had to read them on their small phone screens).
- The drivers had to click “accept” if they wanted to continue using the app, often within tight time constraints.
Ultimately, the Court found that it is possible to be both a facilitator and an employer, and that Uber was both in this case.
The Court also clarified that this decision only relates to the four plaintiff drivers (other Uber drivers will not instantly become employees), but noted that the decision could have a wider impact given the uniformity of the Uber operations and framework.
This case illustrates that this area of law is dynamic, and the Court will not allow businesses to ‘structure’ their way out of minimum employment protections.
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