From Lexology, Andrew Shaw, Fiona McMillan, and Andy Bell discuss a recent case in New Zealand in which the Court of Appeal looked at the realities of the relationship to determine that drivers were employees. Andrew, Fiona, and Andy write:
Control
Interestingly, the CA distinguished between the level of control Uber had over drivers when they were logged in on the app, versus when they were not logged in. The CA considered that Uber exercised a high level of control over drivers when they were logged in on the app, while drivers retained a high level of control over whether, how, and when they drove for Uber when they were not logged in.
While a driver is logged in, they cannot repeatedly ignore requests for rides, as this results in them being logged out, thereby “effectively terminating that period of engagement”. When drivers repeatedly declined requests they received warnings, suspensions, and eventually, termination of the relationship.
The CA further noted that: “once a request is accepted, Uber reserves to itself the ability to control — and does in practice control — almost every facet of the manner in which the driver provides services to the rider, and of the payment for those services.”
This meant, in the CA’s view, the level of control exercised while a driver is logged in is “consistent with an employment relationship during those periods”.
Fundamental Test
The CA considered that the “fundamental test” was whether the drivers were carrying on a business on their own account or working in Uber’s business. Certain factors indicated that the drivers were operating their own businesses, namely that they decided when and where to work and were required to provide their own car and phone and meet associated costs such as data and insurance.
On the flipside, Uber unilaterally determined the terms of the driver agreement and exercised full control over the terms on which a driver provides transportation services, while logged into the Uber app.
For the CA, it was clear that: “when one focusses on the realities of the relationship… it is tolerably clear that drivers are not in business on their own account, making the types of decisions that an independent business operator would normally make, and bearing the risks and enjoying the returns of those choices.”
This meant that, despite signing a contract with Uber which described them as independent contractors, the Uber drivers were in reality, employees.
Source: Uber Drivers are Employees — Court of Appeal – Lexology
See also Dentons in New Zealand – Uber loses appeal – four Uber drivers are employees, not contractors which also analyzes the decision saying:
The Court of Appeal criticised the earlier Employment Court approach to the relevant test imposed by section 6 of the Employment Relations Act. It confirmed that the first step should be to look at the parties’ agreement governing the relationship, rather than considering whether the individual is vulnerable or suffering from an imbalance of power. However, that is not determined by the labels the contract uses – calling a worker a ‘contractor’ in an agreement will not decide the issue. The Court held the focus should be on the substance of the parties’ mutual rights and obligations, interpreted objectively. But when dealing with contracts which are offered on a “take it or leave it” basis, it will be much less likely that the labels and similar terms genuinely reflect the parties’ intentions about the real nature of the relationship.
