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The highest Court in New Zealand, the Supreme Court, has delivered its judgment finding that four Uber drivers are employees of the rideshare giant under section 6 of the Employment Relations Act 2000 (ERA).[1]
This decision, like those before it, has significant implications in the world of employment law. It is particularly relevant to how the rideshare platform, and similar services in the ‘gig economy’, engage people to deliver services, and whether those people (like Uber drivers) are employees with statutory entitlements.
A short background
Employees are entitled to benefits that contractors are not. An employee is defined in the ERA as a person employed to do any work for hire or reward under a contract of service.
Independent contractors conduct business independently of others, do not have an employment agreement, and earn income by invoicing for their services. Importantly, contractors are not covered by employment legislation and therefore are not afforded minimum entitlements, such as sick leave and holiday pay.
In 2022, four drivers sought declarations that they were employees of Uber. The case has worked its way through various levels of appeal to the Supreme Court.
In the Employment Court, Chief Judge Inglis approached the issue, and the statutory test for the meaning of an employee in section 6 of the ERA, in the context of a changing labour market. Her position was that section 6 not only ensured minimum standards, but recognised the inherent vulnerability between employer and employee, and the need for employees to be protected from exploitative conditions. With this in mind, her Honour considered the relationship between Uber and its drivers, concluding that each of the four plaintiff drivers were employees.
The Court of Appeal narrowed the Chief Judge’s approach, arguing that ‘vulnerability’, in and of itself, should not expand the gateway test of “doing any work for hire or reward under a contract of service” in section 6. The Court of Appeal held it was for Parliament, not judges, to determine whether vulnerable workers, who were not employees, should be afforded the protection of the ERA. The Court of Appeal nevertheless made the same finding as the Employment Court – that the Uber drivers were employees, despite contractual descriptors to the contrary.
Uber was granted leave to appeal to the Supreme Court on the following questions of law:
- whether the Employment Court erred in its interpretation of “employee” in section 6 (as the Court of Appeal found); and
- if so, whether the Employment Court’s decision should be modified or reversed.
Positions on Appeal in the Supreme Court
Counsel for Uber maintained that various service contracts (including Services Agreement, User Terms, and Community Guidelines) indicated that employment was not intended; that drivers were, in effect, ‘self-employed’. It was submitted Uber did not ‘control’ drivers, nor integrate them into the business, it simply provided drivers with the opportunity to form business relationships as a third-party facilitator. It argued that it was a technology business and did not provide transport services to riders. Uber therefore submitted the relationship between drivers and Uber (either as a platform or a company) was not an employment relationship.
The respondent drivers submitted that the Court of Appeal objectively and correctly assessed the parties’ intentions and properly determined that the drivers were employees. Counsel for the drivers further submitted that they were employees because they were controlled by Uber and unable to conduct business on their own account.
Supreme Court’s Findings
The Supreme Court did not substantially depart from the finding of the Court of Appeal, agreeing with the Court of Appeal that “…no weight need[ed] to be given to contractual language which disguises the real nature of the relationship [between Uber and its drivers]”. The various contracts that drivers had to sign and accept to use the Uber platform, labelling drivers as independent of Uber, and which sought to contract out of employment law obligations, were to be given no effect.
It was held that the Court of Appeal did not misinterpret the relevant legal tests, including the section 6 threshold (of work for hire or reward under a contract of service) and the common law position set out in Bryson v Three Foot Six Ltd.[2] The Court noted, per Bryson, determining whether a person is an ‘employee’ under section 6 of the ERA involves an assessment of the contract, any divergences or supplementation to its terms, features of control or integration into the business of the employer, and an expression of a common, objective, intention to enter into an employment relationship.
In its analysis, applying the tests set out in Bryson, the Supreme Court asked: (a) whether Uber engages drivers to work for hire or reward; and (b) whether Uber engages drivers under a contract of service?
In answer to the first question, the Supreme Court found (as had the Courts below) that Uber supplied transport services to its users and engaged drivers as employees to deliver those services. It found that because “requesting a ride” via Uber involved such high degrees of anonymity, drivers had earnt no goodwill outside of the platform, and could not, realistically, establish a client base in the same way as an ordinary taxi service.
Agreeing with the Court of Appeal, the Supreme Court found contractual ‘window-dressing’ could not mask what was, in effect, an employment relationship. On this point, the Supreme Court noted “[a] passenger could not reasonably be expected to think they were contracting with the driver when they got into the car… [t]hey ordered the service from Uber and agreed to pay Uber for it.” Uber was not in the business of distributing software; it made money by charging riders for trips and, by extension, engaged drivers for hire or reward (as employees) to make those trips happen.
In answer to the second question, the Supreme Court found Uber exercised high levels of control over drivers, characteristic of an employment relationship. For example, the app tracked drivers’ movements, sanctioning them for rejecting rides or taking inefficient routes, meaning there could be no sub-contracting allowed, or competition created by drivers ‘multi-apping’. It was held to be sufficient that Uber’s ‘authority’ and ‘control’ over drivers occurred by technological means (as this was a feature of modern working conditions). The Court considered digital services which connected sellers and buyers of goods needed to be analysed on a service-by-service basis to determine whether they created employment relationships. Other matters, such as the driver’s inability to benefit from consumer loyalty (therefore depriving them of goodwill), and control over performance were also considered.
Further, the Court noted an employee did not surrender their status by signing an agreement labelling them as contractor. The majority considered that while the contractual descriptions may be afforded weight in normal circumstances, it should be given no weight where it disguises the real nature of the relationship. However, in a separate judgment, Glazebrook and Ellen France JJ found it relevant the drivers viewed themselves as self-employed and considered Uber’s contractual descriptions of drivers’ roles as relevant but not definitive.
On these grounds, the Supreme Court dismissed the appeal by Uber. It affirmed the findings of the Court of Appeal that the drivers were indeed employees under section 6 of the ERA, engaged by Uber to work for hire or reward, to supply its passenger transport services.
What you need to know
- The correct test for whether a person is an employee is the real nature of the relationship (including the behaviour of the parties in applying the contractual terms).
- Contractual descriptions are not the be-all and end-all: practice can override or supplement a contract.
- The inequality of bargaining power in the employment relationship is relevant to the assessment.
- This judgment does not require a change to how Uber drivers work, rather, it has confirmed the minimum rights that drivers have available to them as employees, and Uber’s obligations as an employer.
- This judgment only applies to the drivers who originally brought the claim against Uber in the Employment Court. However, it’s impact may be far reaching and could prompt other drivers to make similar claims. Uber has confirmed it will make no changes to its services following the Supreme Court Decision.
Changes are coming
In June this year, the government introduced the Employment Relations Amendment Bill which, among other things, would change the meaning of employee in section 6 of the ERA by carving out a new exception for those working as a ‘specified contractor’. The changes are expected to be passed into law next year.
Under the proposed changes a person will not be an employee, if the person:
- completes work for another pursuant to a written agreement stating that they are an ‘independent contractor’; and
- is not restricted from working for others; and
- does not need to be available to work on specific times of day or days, or for a minimum number of hours, or the worker can sub-contract work; and
- can decline additional tasks without the contract being terminated; and
- has had a reasonable opportunity to seek independent advice before entering into the arrangement.
These changes could have big implications for workers and may negate some of the impact of the Supreme Court’s decision, at least for Uber. We will keep you updated on any developments!
Interested in this decision? Read the articles our Employment Law Team have previously written on this topic here: Your Uber Driver has arrived – and is an employee! | Hesketh Henry | Employment Court Deems Uber Driver a Contractor | Hesketh Henry | Employment Court Deems Gloriavale Residents Employees | Hesketh Henry | Gloriavale residents found to be employees – yes, again! | Hesketh Henry
If you would like to learn more about employment status, or the potential legislative changes, please contact the Employment Law Team or your usual contact at Hesketh Henry for advice.
Jim and Mary gratefully acknowledge Emily O’Callaghan (summer clerk) as co-author of this article.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
[1] Rasier Operations BV v E Tū Inc [2025] NZSC 162
[2] Bryson v Three Foot Six [2005] NZSC 34
