A recent Uber lawsuit ruling by the New Zealand Employment Court found that four Uber drivers were actually employees, not independent contractors.
This ruling could have widespread implications for organisations in New Zealand, that engage workers under contract status while treating them like employees.
Today, we’ve undertaken a review of the Uber lawsuit and its ruling; the reasons behind the ruling; and the impact it may have on the broader gig economy in New Zealand and across the globe.
The Uber Lawsuit: How Did it Come About?
Four Uber drivers, through two New Zealand trade unions E Tū and First Union, pursued legal action against Uber, seeking a declaration from the organisation that they were employees.
Their basis for the claim was focused on the fact that none of these drivers were running their own businesses, or making decisions as business owners, working as Uber drivers.
Employment status – the framework under which a worker is engaged to work in an organisation – is the absolute bedrock on which most of New Zealand’s minimum employment rights rest. And this was key to the Uber lawsuit undertaking.
Employment status was described by the judge as the “gateway through which a worker must pass” before they can access minimum legal entitlements, such as:
- Minimum wage
- Minimum hours of work
- Rest and meal breaks
- Paid holiday leave
- Paid parental leave
- Paid domestic violence leave
- Paid bereavement leave
- Access to union membership and collective bargaining
- The ability to pursue personal grievances
- The right to challenge unfair dismissal
On that basis, the judge saw the drivers being undermined in their working engagement with Uber. And deemed them to be employees.
Judges Verdict in Uber Lawsuit
The judge ruled that as the drivers were not running their own businesses, they were effectively employees of Uber. Chief Judge Christina Inglis stated:
“Uber is the only party running a business. It is in charge of marketing, pricing and setting the terms and nature of the service provided to riders, restaurants and eaters.”
And this: Uber “creates, dictates and manages the circumstances under which its business is carried out, and driver labour is deployed in order to grow that business”, Judge Inglis further observed.
“The plaintiff drivers were required to provide their labour with due skill, care and diligence, and to maintain high standards of professionalism, service and courtesy – all set and enforced by Uber. All of which points firmly towards an employment relationship.”
Chief Judge Christina Inglis, New Zealand Employment Court
The judge concluded that each of the drivers making the claim was in an employment relationship with Uber. And therefore, they are entitled to a declaration of employment status. The judge noted that the gig economy and digitally run platforms are increasingly being called to task on the employment status of their workers, not just in New Zealand but across many other global jurisdictions.
Is This a Rising Trend Across the Globe?
In this Uber lawsuit, the judge wasn’t being called into making broader assertions of the employment status of all Uber drivers. The judge said:
… all Uber drivers “do not, as a result of this judgement, instantly become employees”.
“It may well have a broader impact, particularly where, as here, there is apparent uniformity in the way in which the companies operate, and the framework under which drivers are engaged,” Inglis said.
Chief Judge Christina Inglis, New Zealand Employment Court
This judgement follows a string of international cases where workers have taken legal action against gig economy companies, in a fight to attain employment rights.
More and more workers are seeking a declaration of employee rights in this industry. A 2021 analysis showed gig economy companies such as Uber and Deliveroo had faced over 40 major legal cases across 20 countries. These include Australia, Chile, Brazil, South Korea, Canada, the UK and Europe.
Also in 2021, authorities in Italy fined UberEats, Glovo, Just Eat and Deliveroo a massive €733m for misclassifying 60,000 couriers. And last year in the UK, the supreme court upheld a ruling that Uber drivers are to be classified as workers rather than independent contractors.
Is This Uber Lawsuit A Sign of the Sector’s Demise?
Just this week, Deliveroo in Australia announced they were shutting up shop after seven years of operations here.
The company stated that company will cease trading permanently, and immediately. By the time the announcement was made this week, the Deliveroo app had stopped taking orders.
The Transport Workers Union had a scathing response to the news of Deliveroo’s demise. They described the move as “sudden and cowardly” and called for the federal government to reform the gig economy.
“This will be a shock to the thousands of food delivery riders who rely on Deliveroo for income.”
The TWU has sought urgent consultation with administrators on what entitlements might be clawed back for food delivery riders who stand to lose their jobs in the blink of an eye.”
Transport Workers Union National Secretary, Michael Kaine
The company’s subsidiary in Australia has been placed into voluntary administration.
Founded in the UK and backed by Amazon, the company denied that federal government reforms to the gig economy played a role. Having said that, the company has undergone multiple court cases in its time over cases relating to whether riders and drivers were employees or independent contractors.
This is just the latest development in the gig economy in Australia. Back in 2018, Foodora exited the Australian market when administrators found workers had been misclassified and were actually employees. The outcome of that court proceeding resulted in the parent company, Delivery Hero, paying $3million in worker backpay.
The stinging issue here for Deliveroo is this: just this week, the federal government was committed to introducing legislation to protect gig economy workers after a historic agreement was struck between Uber Australia and the Transport Workers Union. After clashing for years, an agreement was finally reached.
So, the drivers and riders for Uber would no longer be treated as contractors and would have trade union support and better wages. This is the major impetus for Deliveroo’s demise in Australia: as reported by news.com.au:
“The food delivery company has gone into voluntary administration in Australia, citing poor profitability in a highly competitive market as the reason behind its collapse.”
Looks like the landscape for gig economy workers in this region is really shifting. We’ll keep an eye on things as they evolve, and keep you updated.
Also, please do contact us if you have any feedback or comments.
As one of the world’s leading providers of contingent worker management solutions, CXC is well-positioned to optimise all elements of your contingent workforce strategy.
With operations in more than 50 countries across five continents and decades of experience, we can assist with every aspect of your program.
If you are interested in discussing this landmark case, please don’t hesitate to contact us.
