Why Uber faces legal challenges in New Zealand

Ride-hailing company Uber found itself in hot water once again as debate regarding its classification of drivers commenced at the Court of Appeal last week.

During the first two days of the hearing, Uber’s legal counsel argued that its drivers should be considered contractors and not employees due to the freedom they enjoy whilst working with the company.

Uber’s assertion contradicts a 2022 Employment Court decision that initially declared drivers to be entitled to rights afforded to permanent employees such as minimum wage, sick leave, holiday pay, and collective bargaining.

READ MORE | Uber workers demand employee rights in New Zealand court

However, Uber's lawyer, Paul Wicks, argued that the drivers' role was more contractual, rendering them ineligible to receive those rights.

Regarding the company’s reasoning, Wicks stated that Uber drivers are afforded a high degree of autonomy and decision-making about their hours. They are also allowed to accept or decline work, take on work elsewhere, and even earn additional income by undertaking extra work.

Since Uber cannot be considered a normal employer, its legal counsel stated the company “cannot tell individuals when to drive, or indeed how to do it.”

Contractors, not employees

Uber’s argument focuses on the premise that the drivers understood they would be working as contractors when they entered into an agreement with the company.

According to Wicks, many of the drivers were highly educated, skilled workers who knew what they were getting into when they signed their contract agreement with Uber.

Uber’s legal counsel called the 2022 decision flawed, claiming it assumed vulnerability on the part of the drivers.

Wicks highlighted the freedom clauses in Uber’s contracts with drivers, which demonstrate how flexible the arrangement was. He stated these made the work more similar to that of contracted employees than permanent workers.

Peter Cranney, a lawyer for the respondent, countered by stating that the clauses in Uber’s contracts were intentionally made difficult to understand.

“These are extremely difficult and complicated documents, which are really the type of thing that one sees on the internet, or wherever, where the idea is to obscure the legal reality of them," Cranney stated.

READ MORE | Uber grants employee status to UK drivers

Why Uber is prioritising flexibility

Uber has made it clear that they are sticking to their flexible work arrangements with their employees.

Emma Foley, general manager for Uber New Zealand, stated 90% of the company’s drivers and delivery people would not continue working for them if the current flexible work arrangements were to cease. She said flexibility is a key part of their business model.

"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,” she stated.

Foley expressed hope that the current Court of Appeal proceedings will lead to the reversal of the earlier Employment Court decision, which she claimed attempted to “shoehorn” independent contractors into traditional employment and threatened the autonomy afforded to Uber drivers and delivery people.

The Uber New Zealand GM stated the 2022 decision created “significant uncertainty for workers and businesses who rely on contracting arrangements."

"More broadly, we believe Parliament should make clear that contractor arrangements - where people have genuine flexibility and are also free to work for other companies, including competitors - are an important feature of the New Zealand employment landscape in the 21st century," Foley stated.

In 2022, a group of Uber drivers won a landmark case against Uber, compelling the company to classify them as employees instead of contractors. The ruling entitled them to receive worker rights and protections akin to other permanent employees.

While the decision applied specifically to the four drivers identified in the case, the Employment Court noted that it might also have wider implications for drivers across New Zealand.