New Zealand’s Supreme Court has ruled that Uber drivers should be classified as employees rather than independent contractors. This landmark decision, delivered on Monday, provides drivers with essential rights, including access to minimum wage protections, paid leave, and the ability to engage in collective bargaining.
The court’s decision comes after an appeal by Uber regarding the classification of its drivers. Under the Employment Relations Act, specifically referencing Section 6, the court determined that the “real nature of the relationship” must be assessed beyond mere contractual titles. The Supreme Court’s ruling is built on principles established in a significant 2005 case, where traditional common law tests for employment were scrutinized, including the degree of control exercised, the integration of the worker into the business, and the extent to which workers operate independently.
In its ruling, the court criticized Uber’s contractual language as “window-dressing,” intended to obscure a genuine employment relationship. Despite Uber’s assertions that drivers are independent, the court concluded that it is Uber that provides passenger transport services, and drivers are engaged in this capacity under an employment framework.
The decision highlighted the extensive control mechanisms employed by Uber, which include unilateral disciplinary actions, algorithmic fare-setting, GPS tracking, and performance evaluations conducted through a rating system. The court pointed out that the rating system functions similarly to an internal management tool, further solidifying the argument for employee classification. It rejected Uber’s claims of merely facilitating contracts between drivers and passengers, asserting that passengers contract with Uber for transportation services rather than with individual drivers.
This ruling is part of an ongoing legal dispute dating back to 2022, aiming to clarify the nature of contracts that may not explicitly define an employment relationship but nonetheless fulfill the criteria for being classified as such. Globally, similar legal actions against Uber have emerged, reflecting a broader trend in the gig economy.
In 2023, a U.S. appellate court also found that Uber drivers are subject to employment contract arbitration clauses, further echoing the New Zealand Supreme Court’s stance on driver employment classification.
This ruling not only impacts the legal landscape in New Zealand but also resonates internationally, as courts worldwide grapple with defining the rights and status of gig economy workers.
