Uber Drivers - Employees

The Employment Court recently released its decision in a case involving four Uber drivers who each sought declarations they were employees for the purposes of the Employment Relations Act 2000 (“Act”).

Uber claimed the drivers were independent contractors and not employees. Uber said it had simply developed a technology platform which enabled contractual relationships to form between other parties, like drivers and riders (or diners, in the case of Uber Eats).

When presented with a question about a person’s status (as between employee and something else, like a contractor), the Court is obligated to consider the real nature of the relationship between the parties. This is sometimes called the “section 6 gateway”.

In this case, one of the issues for the Court to determine was the extent to which, if at all, the Act captured new ways of working, thereby bringing new classes of workers into its protective folds.

Ultimately, the Court said the section 6 gateway requires a broad contextual inquiry, informed by the Act’s social purpose of regulating the labour market and ensuring the maintenance of minimum employment standards.

This broad inquiry requires consideration of “all relevant matters”, including the parties’ intentions. Other relevant factors could include the exercise of control by one party over another, the supposed employee’s degree of integration, and any written agreements.

In undertaking its section 6 gateway analysis, the Court acknowledged “...a number of the classic hallmarks of a traditional employment relationship are missing.” For example, drivers weren’t obliged to carry out work on particular days or hours.

However, and notwithstanding those differences, the Court felt the degree of control exerted by Uber - both directly and indirectly, and often unilaterally - was significant. In particular it dictated all contractual terms and set all fares and fees:

“The short point is that the way in which an employer exerts “authority” and “control” over an employee (classic hallmarks of an employment relationship) has acquired less direct, but equally effective, characteristics due to developments in technology. That makes them no less potent, or relevant, to the s 6 analysis.”

This degree of control (and its effects) meant drivers weren’t operating their own businesses as independent contractors but were in fact employees. The Court also did not find the written independent contractor agreements as persuasive:

“Section 6 does not accord primacy to party documentation, or the way in which they have described their relationship, and it would undermine the purpose of the provision to read it this way. So, while I agree that the documentation describes the relationship in the way contended for by … [Uber], I do not agree that the way it is labelled accurately describes the relationship. Rather, it has been constructed in a way that suits Uber’s business interests….”

Although the decision only applies to the four driver plaintiffs, it has obvious implications for thousands of others. It also probably won’t end here, with one or both parties likely to appeal on the basis it raises important and novel questions of law.

But the groundwork is set and the Court’s initial landscaping seems to make it clear that new ways of working aren’t impediments to the application of minimum statutory entitlements, like those set out in the Act (and allied laws, like the Holidays Act 2003).

We regularly advise large clients on the implications of the section 6 gateway to their business. If you want advice on the implications of this decision for your business, reach out to one of our specialist employment lawyers.

UPDATE (June 2023):): Uber has been granted the right to appeal to the Court of Appeal, leaving the decision in flux (in terms of any broader implications). Uber has also indicated that it will lobby to try to find an alternative approach for “gig economy” workers to remain as contractors but receive better legal protections. Watch this space!