COURT OF APPEAL’S REVIEW OF UBER DRIVERS’ EMPLOYMENT STATUS

Posted by Tony Sung on September 1 2023 in News

On 25 October 2022, Chief Judge of the Employment Court, Judge Christina Inglis, made a historic ruling declaring that Uber Drivers, including Uber Eats, are employees rather than contractors.

The Court of Appeal has recently granted Uber Group’s (Uber) application for leave to appeal Chief Judge Inglis’ decision. This is a big blow to the Uber drivers who unionised and initiated bargaining with Uber in reliance on Chief Judge Inglis’ decision.

However, it is not surprising that the Court of Appeal has granted the appeal. In December 2020, another Employment Court judge, Judge Joanna Holden, ruled that Mr Arachchige, who was an Uber driver in Auckland from 15 May 2015 until 20 June 2019, was not employed by Uber.

It was anticipated that Uber would appeal the Employment Court’s 2022 ruling, given Chief Judge Inglis’ liberal interpretation of employees under section 6 of the Employment Relations Act 2000 and Judge Holden’s decision not being consistent with Judge Inglis’ decision.

The Court of Appeal has granted leave to appeal on the following questions of law:

(a)  Did the Employment Court err by misdirecting itself on the application of section 6 (the meaning of “employee”) of the Employment Relations Act 2000?

(b)  Did the Employment Court err by misapplying the test in section 6, or in the alternative, was the Court’s conclusion so insupportable as to amount to an error of law?

(c)  Did the Employment Court err in finding that joint employment may arise in New Zealand because of several entities being sufficiently connected and exercising common control over an employee?

Questions (a) and (b) are directed at the interpretation of “employee” under section 6 of the Employment Relations Act 2000 and the assessment of the “real nature of the relationship” between the parties. Compared to Judge Holden’s decision, Chief Judge Inglis’ decision was quite liberal because she concluded that:

1. Uber exercised significant control over its drivers via its reward schemes incentivising work during peak times and the acceptance of rides as well as retaining its right to discipline drivers, for example, by revoking access to the Uber App;
2. The fact that the four Uber drivers represented by the Union (Mr Abdurahman, Mr Keil, Mr Rama and Mr Ang) were not solely engaged in work as Uber drivers is of limited relevance to the section 6 inquiry; and
3. Flexible working arrangement is not necessarily an indicator that the real nature of the relationship is not one of employment.

The Court of Appeal’s reason for granting appeal on these questions of law were that:

1. They raise questions of law in the context of new ways and fast-moving changes to the way in which work is done; and
2. While the Employment Court’s declaration related to the individual drivers on whose behalf the declarations were sought, it potentially has a broader impact on many other drivers where there is an apparent uniformity in the way in which the businesses operate and the framework under which the drivers are engaged.

Question (c) is directed at Chief Judge Inglis’ conclusion that the real nature of the relationship in this case was joint employment. This question is interesting because five companies of Uber Group were sued by the Union representing four Uber Drivers. Five companies of the Uber Group are:

1. Rasier Operations BV - an entity involved in the Uber rideshare business prior to 1 December 2018.
2. Uber Portier BV - involved in the Uber Eats business.
3. Uber BV - involved in the Uber rideshare business.
4. Portier New Zealand Limited - involved in the Uber Eats business.
5. Rasier New Zealand Limited - involved in the Uber rideshare business.

Chief Judge Inglis made a declaration that all five Uber Group companies above were joint employers of four Uber drivers represented by the Union. This declaration was made despite the fact that two companies of Uber Group, which were exclusively involved in Uber Eats, were joint employers of three Uber drivers who never worked for Uber Eats. The Court of Appeal’s decision regarding this question can have an impact on companies with subsidiaries operating on traditional business models as well as companies operating platform business models.

The New Zealand government has postponed its contractor law reform which is intended to address the issue of employees being misclassified as contractors pending the result of the 2022 Uber case appeal. In the circumstances, there will be no clarity on the issue of the contractor until the Court of Appeal rules on this point.

If you would like more information regarding the above, or have any questions, please contact us.

DeAnne Brabant | Special Counsel| deanne.brabant@shieffangland.co.nz

Tony Sung | Associate | tony.sung@shieffangland.co.nz

Isaac Eustace-Smith | Solicitor | isaac.eustace-smith@shieffangland.co.nz