Uber required to meet national employment law standards

Opinion: The Court of Appeal has upheld the Employment Court’s finding that Uber drivers could be employees. The Appeal Court’s reasoning is somewhat more conservative than the Employment Court’s and more closely follows the Supreme Court in the 2005 Bryson case. If anything, this strengthens the factual finding.  
Parliament has, for many decades, enacted a range of measures intended to provide a minimum level of economic security for workers and to ensure various fiscal and other obligations owed to the state are effective.
The legal “gateway” that activates such legislation is the status of being an “employee”. Key protections include a minimum wage, the right to annual and statutory holidays, protection against unjustified dismissal, and the right to bargain collectively.
The law also requires employers to facilitate tax collection through the PAYE system and payment of ACC levies. Such obligations come at a cost, including the cost of maintaining effective payroll and HR systems. For fairly obvious reasons, legislation prevents employers and employees from contracting out of these statutory requirements. 
The most straightforward legal technique to avoid employer liabilities is to claim that workers are not employees but contractors, or in the case of Uber “an independent provider of peer-to-peer transportation services”. The claim is akin to describing an animal that is small, waddles, and quacks as a swan rather than a duck.
In the Uber case, the type of worker who was the subject of litigation looked, acted, and was largely indistinguishable from an employee. Any difference lay not in the workplace reality but largely in the contractual terms – documents written by lawyers with the intention of obscuring the real nature of the relationship by inserting provisions that suggest considerably more worker freedom than exists in practice.
At the heart of the Appeal Court’s decision was the reality that the driver-Uber relationship gave Uber total control over drivers, including the right to dispose of their services at Uber’s complete discretion. Indeed, the US employment-at-will model – which gives an employer the right to dismiss a worker without reason – is typically embedded in many such gig platforms.
Labour law determines worker status by one of two methods. The first, and that favoured by the Act party, is that the contract (in effect the employer) determines the status. This approach provides an open door to worker exploitation.
The second is to provide a statutory test to assess the “real nature” of the relationship examining the economic nature of the relationship and asking whether the worker is in reality “carrying on business on their own account”.
The Court of Appeal held “we consider that 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”.
Such cases reflect changing modes of employment. The traditional full-time employee with a single employer remains dominant but the casual or part-time employee working for multiple employers has become increasingly common. The Uber decision shows the courts are capable of adapting to this reality and that the statutory test provides the flexibility for them to do so.
In its criticism of the decision, Uber stated that “Flexibility and choice are hallmarks of today’s modern workforce, and Kiwis deserve certainty when it comes to the type of work they choose to do”. Nothing in the Uber decision reduces flexibility or threatens the gig-model Uber relies on. What it does mean is that Uber will be required to meet national employment law standards, something that one suspects could be done overnight.
The line between employees and other workers is important. Inappropriate use of the contractor model undermines statutory minimum conditions and provides an unacceptable competitive advantage to such enterprises.
Unfortunately, although the statutory minimums are very much a safety net (the minimum wage, for example, is about $4 below the living wage), many employers are happy to try to evade these costs. It is apparent from news reports that evading minimum standards is widespread and almost certainly grossly under reported.
Though this behaviour may be thought to be confined to small fly-by-night employers, the reality is that gig companies such as Uber seek to enhance their profits by evading or avoiding national regulation and by shifting the costs of providing their service onto the drivers.