Uber Drivers Declared Employees – Implications

The Supreme Court has ruled that four Uber drivers are employees, not independent contractors. The unanimous judgment in Rasier Operations BV v E Tū Incorporated dismissed Uber’s appeal and affirmed earlier Employment Court and Court of Appeal findings. This ruling has significant implications for all employers, particularly those operating in the gig economy.

Key Findings of the Court
The Court applied Section 6 of the Employment Relations Act 2000, which requires assessing the real nature of the relationship rather than relying on contractual labels. Referring to the precedent set in Bryson v Three Foot Six Ltd (2005), the Court examined the key factors of control, integration, and whether workers operate businesses on their own account.

Despite Uber’s contracts describing drivers as independent contractors, the Court found these provisions to be “window-dressing.” Uber was deemed to provide passenger transport services and engage drivers to deliver those services under conditions of significant control. Mechanisms such as algorithmic fare-setting, GPS tracking, performance monitoring, and disciplinary systems demonstrated an employment relationship according to the Court. Passengers contract with Uber, not individual drivers, further reinforcing this conclusion.

Implications for Employers
This decision gives Uber drivers access to minimum wage protections, paid leave, and collective bargaining rights. It also opens the door for thousands of drivers to claim backpay and other entitlements. On the flip side it does raise questions on what IRD will do where Uber drivers have claimed expenses on the basis they were contractors. For employers, the ruling reinforces that contractual language alone cannot override the substance of a working relationship. Businesses using contractors should review their arrangements carefully to ensure it is genuinely a contractor relationship.

Next Steps for Employers

Review your contractor relationships to assess the “real nature” of work. This means considering the degree of control, integration, and economic dependency of your contractors to your business. They could be contractors in name only.

Our consultants will be happy to help with a contractor v employee assessment.