Government accused of undermining Uber drivers’ legal battle to be treated as employees

A lawyer believes the Government will be wary the courts might not deliver the outcome it wants in the precedent-setting Uber drivers' case. Photo / 123RF

The Government is being accused of undermining a court case that will set a precedent for how some gig economy workers are treated.

The Court of Appeal is considering whether four Uber drivers, currently classified as contractors, are actually employees and therefore entitled to holiday pay, sick leave, a minimum wage and options for recourse for unjustified dismissal.

The dispute is before the Court of Appeal because Uber challenged a 2022 Employment Court decision that found the drivers were employees.

If Uber loses the appeal, it could apply to take the matter to the Supreme Court, further drawing out the case. It’s unclear when the Court of Appeal will deliver its decision.

While the outcome will technically apply only to the four drivers subject to the case, it will be disruptive for companies like Uber, whose use of contractors is key to its business model and is being challenged overseas.

Members of Parliament from across the aisle have for some years believed the law that defines workers’ statuses is due for a refresh in light of the changing nature of work.

Nonetheless, the position taken by the former Labour Government was to wait for the Uber case to progress through the courts before reviewing the law.

In December, Act leader David Seymour also said he wanted to wait for the case to conclude before tackling the issue.

But speaking on behalf of his deputy, Workplace Relations and Safety Minister Brooke van Velden, Seymour said the Government would initiate a review now.

“Any decisions made will not be dependent on the outcome of any court case,” Seymour said.

Buddle Findlay law firm partner Sherridan Cook believed the Government would be wary that the courts might not deliver the outcome it wants.

Ahead of the 2023 election, Act campaigned on amending the Employment Relations Act “so that contractors who have explicitly signed up for a contracting arrangement can’t challenge their employment status in the Employment Court”.

It suggested contractors should sign agreements that make it clear they won’t have access to full employee rights.

Act believed agreements should spell out the benefits afforded to contractors – including that they can do work for other businesses (including competitors), which can’t terminate their contract if they don’t accept a certain task.

The party suggested contractors who believed the terms of their contracts were unfair could seek recourse under the Fair Trading Act, which deals with unfair contract terms.

Dennis Maga – the general secretary of First Union, which is backing the Uber drivers in court – was outraged by the situation.

He felt the Government was undermining the Employment Court, which had supported the drivers.

Maga had hoped the Government would be “decent enough” to wait for the issue to make its way through court, before charging ahead with its review.

He was also disappointed the Ministry of Business, Innovation and Employment (Mbie) hadn’t invited First Union to partake in an initial consultation on the employee/contractor distinction.

Rather, the Council of Trade Unions – an umbrella group for unions – had been asked to talk to officials.

“This is already a pre-determined consultation,” Maga claimed.

Seymour said, “The issue of the employee/contractor boundary is much wider than any particular court case, and pre-dates the Uber case …

“Many businesses adopt contracting arrangements, and the gig economy is now an important feature of New Zealand’s overall economy. These businesses and their workers deserve certainty over their working arrangements and confidence to invest.”

Act leader David Seymour flanked by ministers Brooke van Velden and Nicole McKee. Photo / Alex Burton

Cook, of Buddle Findlay, agreed the law needed clarification.

He said that before the current Uber case emerged, the existing legal precedent would suggest the drivers were in fact, contractors.

He explained the case would be decided in accordance with the law under which it was taken. So, it wouldn’t be affected by the Government’s review.

If the Uber drivers end up winning, other businesses could be taken to court by the contractors they engage, making claims going back up to six years.

Any amendments the Government makes to the law will apply only in the future.

Maga, of First Union, acknowledged the situation was messy.

BusinessNZ, however, sided with the Government.

It welcomed the acknowledgement of the confusion that exists around the interpretation of the Employment Relations Act.

“The problem requires investigation on its own merits, regardless of the outcome in the current Uber case,” a spokeswoman for the group said, underlining her support for a “timely” review.

Mbie will continue engaging with a small group of stakeholders, before putting policy options before van Velden.

It hasn’t published a consultation document yet, and wouldn’t disclose who it’s engaging with, saying this request would need to be made under the Official Information Act.

Jenee Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.