The precarious conditions of gig workers will be under the spotlight in a looming Employment Court challenge to Uber.

New Zealand’s two largest private sector unions are taking Uber to court with a claim that its drivers are entitled to the full protection of employment law and are not – as the company maintains – self-employed contractors.

E tū and FIRST unions are seeking a determination from the Employment Court that the drivers are employees. They plan to call individual drivers as witnesses in a case that is bound to bring the conditions of so-called ‘gig’ workers into sharp focus.

It is thought there are more than 6500 Uber drivers in the country, although that estimate is from 2019 and pre-dates the company’s expansion into six more centres.

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FIRST Union’s Anita Rosentreter alleges these drivers are currently “misclassified as contractors and, as a result, denied basic rights like holiday pay, sick leave, KiwiSaver contributions, and the right to join a union and collectively bargain”. Without job protection, Uber can disconnect them from the platform and they have no way of challenging that decision.

Court papers being prepared by the two unions are likely to draw strongly on a recent ruling of the UK Supreme Court that Uber drivers are workers, not independent contractors. The landmark decision was a major blow for Uber, which had fought for five years to overturn a ruling of the Employment Tribunal over a claim brought by 25 drivers. Uber lost at every level of appeal – the Employment Appeal Tribunal, the Court of Appeal and finally, following a hearing in June last year, before the Supreme Court.

This means Uber drivers in the UK are now entitled to the minimum wage and holiday pay.

The Supreme Court unanimously rejected Uber’s argument that it was merely a technology platform that charged self-employed drivers a service fee for the use of its app. The court said the purpose of employment law is to protect vulnerable workers who are subordinate to more powerful employers, and to prevent employers from contracting out of their duties.

It relied on five key factors in deciding that the Uber drivers were not running their own independent businesses:

· Uber sets the passenger fare;

· Uber imposes the contract terms with drivers, who have no say;

· once drivers are logged onto the app they have little choice about whether to accept a ride; for instance if they decline too many rides they can be locked out of it for 10 minutes;

· Uber uses the passenger rating system to control drivers by terminating them if their performance falls below average;

· the Uber system prevents drivers from forming a relationship with a passenger beyond an individual trip.

The relationship between the drivers and the company was “tightly defined and controlled by Uber”, ruled the justices. “Drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance.”

The UK decision, released in February this year, came just two months after the Employment Court in New Zealand came to the opposite conclusion in a similar case taken by a former Auckland Uber driver, Atapattu Arachchige.

In that case, Judge Joanna Holden said Arachchige – who had been dismissed by Uber after a passenger complaint, which he said he had no opportunity to respond to – was a self-employed contractor, not an employee. She said he was free to take on other work, did his own tax, and could improve the profitability of his business by deciding where and when to drive, and “what car, data plan, insurance and other business support he might use”. Uber had “very little” control over how he carried out his part of the undertaking.

In the upcoming court challenge from E tū and FIRST Union, the relevance of the UK Supreme Court decision to New Zealand is likely to be contested on the grounds that the UK’s “worker” classification has no equivalent here. In the UK it is an intermediate step between employee and contractor, giving some basic employment rights but not, for instance, the right to challenge termination of contract.

The UK and New Zealand cases are part of a global wave of legal scrutiny – and political lobbying – regarding gig work and whether those who do it are entitled to better protections.

Several cases brought by Uber drivers before Australia’s Fair Work Commission claiming employee status have been rejected. However in a decision two months ago, the commission found that a rider for the Deliveroo meal delivery company was an employee. The worker, Diego Franco, brought the case after being terminated from the platform in the early weeks of the pandemic for failing to deliver orders within a reasonable time.

In France, the top court has ruled that Uber drivers should be considered employees. In California, ride-share drivers were deemed employees early last year, but Uber, Lyft and other platforms responded by ploughing $200 million into a campaign to have their drivers carved out of the full range of employee benefits.

In a just-released paper on gig work in New Zealand, FIRST Union’s Rosentreter and Edward Miller argue such workers are falling into a legal “grey area” without basic protections, and that as this type of work spreads into other sectors it will bring down employment standards across the board.

“While gig work is currently largely constrained to a few key industries like passenger transport and delivery driving, in other jurisdictions we are seeing gig work expanding into other sectors like care work, telecommunication services, construction and education,” they write in the report.

FIRST surveyed gig workers late last year via Facebook groups and on MTurk. Ninety-five workers responded and their answers indicated that, while they valued the flexibility and independence of the work, the financial rewards were meagre.

More than half said their hourly income after expenses was less than the minimum wage ($18.90 at the time of the survey), and three out of five said they would struggle to pay a sudden $500 bill. More than half said they didn’t get enough regular work, and more than a third of those for whom gig work provided their main income said they were finding life “difficult” or “very difficult” financially. Sixty percent of those surveyed had a tertiary degree.

Rosentreter said some drivers worried about losing the independence and flexibility that comes with being a contractor, but “the reality is they have much less control than they would like anyway. They often end up scheduling their lives around peak times on the app and spend much of their time waiting around or driving without being paid.”

The key statutory provision under which the courts in New Zealand determine whether someone is a contractor or an employee is section 6 of the Employment Relations Act. It requires judges to look at the substance of the relationship rather than relying on any written contract, and taking into account factors such as who controls the relationship. Just because a contract states that a person is a contractor does not make it so, if the court finds that this is a ruse by an employer to avoid its obligations.

Section 6 has had a good workout in recent times in more traditional areas of the economy, including a finding last month that a builder taken on by CI Builders as a contractor was in fact an employee. And in a significant case last year, the Employment Court found that courier driver Mika Leota had been an employee and not, as claimed by his employer Parcel Express, his “own boss”. Among the facts pointing to the latter conclusion were the fact that the Leota’s van had to be emblazoned with company signage, he had to work where he was told to, and take only as much leave as it permitted (and find a substitute driver). There was no opportunity to “grow” his own business. The court found that his English was such that he was unlikely to have understood the contract Parcel Express signed him up to.

The question of better protections for vulnerable workers who are deemed contractors is currently being looked at by a tripartite working group facilitated by public sector consultant Doug Martin. It has been tasked with coming up with recommendations for the Government by the end of this year.

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