The Supreme Court has released its final judgment on the employment status of Uber drivers, confirming that the four drivers involved were employees and dismissing Uber’s appeal. This follows earlier stages in the litigation, including the Employment Court’s and Court of Appeal's findings that the drivers were also employees albeit disagreeing on the test that should be applied to reach the same conclusion.  

Status claims remain a complicated area of the law as the test to determine whether a worker is an employee or contractor is heavily dependent on an analysis of a broad range of factors that has not been adapted to account for new ways of working. However, proposed amendments to the Employment Relations Act 2000 introducing a four factor 'gateway' test to determine worker status will provide some relief, likely later this year.  

How the Court approached the reality of platform work

The Supreme Court held that:

• the Court of Appeal had correctly applied the test in Bryson v Three Foot Six Ltd (the Lord of the Rings case) which held that a film worker was an employee, not an independent contractor.
• while some weight may be placed on the parties' characterisation of their relationship as contractor or employee (such as where there has been a genuine and legally informed negotiation);
• weight will not be placed on the description of the relationship where there is an inequality of bargaining power or contracts offered by the employer on a 'take it or leave it basis' exploiting the power imbalance between the parties;
• however, inequality of bargaining power cannot be used to extend the concept of employee (as suggested by Chief Judge Inglis in the Employment Court).
• in this case it was not just that Uber's description of the relationship with the drivers that was at issue, but that the contracts actively disguised the reality of the parties' relationship.

The Supreme Court rejected Uber's argument that it merely provided a technology platform that may be used by riders and drivers to arrange transportation services as opposed to Uber delivering passenger transport services by engaging or employing drivers.  

Practical steps to take now

The decision offers an opportunity to review contractor relationships with a more critical lens to determine the risk that workers are misclassified (giving rise to minimum employment entitlement claims) and consider whether the proposed new gateway test can be adopted to provide more certainty, when it comes into force.

We are likely to see more claims from workers seeking to clarify their status giving rise to large financial claims for holiday pay and minimum wage, and further policy discussion about the future of gig work in New Zealand.

If you would like support reviewing your contractor model or understanding how this judgment may affect your organisation, we are here to help.