A group of Uber drivers in New Zealand won a landmark case Tuesday against the ride-hail company which will force Uber to treat them as employees, rather than independent contractors.
New Zealand’s employment court decision only applies to four drivers who were part of a class action lawsuit filed last July, but the ruling may have wider implications for drivers across the country keen on qualifying for worker rights and protections.
The move in New Zealand comes just a couple of weeks after the U.S. Department of Labor proposed widespread changes to how gig workers should be classified. Specifically, the proposed ruling seeks to classify gig workers as employees if they are economically dependent on the company for which they work.
The formal decision in New Zealand was made in respect to the individual drivers in the case. The court doesn’t have jurisdiction to make broader declarations of employment status for all Uber drivers, according to chief employment court judge Christina Inglis. That means all other Uber drivers don’t immediately become employees; however, Inglis did say the decision “may well have broader impact” because of the “apparent uniformity in the way in which the companies operate, and the framework under which drivers are engaged.”
In the ruling, the Employment Court said that even though a worker’s contract might define them as an independent contractor, that definition depends more on the “substance of the relationship and how it operated in practice.”
“The Court accepted that some of the usual indicators of a traditional employment relationship were missing,” reads the ruling. “However, it was found that significant control was exerted on drivers in other ways, including via incentive schemes that reward consistency and quality and withdrawal of rewards for breaches of Uber’s Guidelines or for slips in quality levels, measured by user ratings.”
The court found that Uber had sole discretion to control prices, service requirements, guidelines, terms and conditions, marketing, relationships with riders and more.
“Uber was able to exercise significant control because of the subordinate position each of the plaintiff drivers was in and which its operating model was designed to facilitate and did facilitate,” according to the ruling.
Two unions, First Union and E tū, took up the case last year on behalf of more than 20 drivers. Their goal was to override a legal precedent set in the Employment Court in 2020 that ruled a driver was not an employee. Labor rights activists argued there, as in the U.S. and everywhere else, that because an Uber driver’s rate is set by Uber, the company controls wages, which puts it in employer territory. At the time, the judge ruled that the driver actually had control over their wages because they could be paid less or improve the profitability of their business through adopting cheaper business costs.
Tuesday’s ruling will grant the drivers in the case sick leave, holiday pay, minimum wage, guaranteed hours, KiwiSaver contributions, the right to challenge an unfair dismissal and the right to unionize, according to New Zealand’s labor laws.
First Union is now accepting Uber drivers to join as members for a discounted fee of $3.05 per week and would move to initiate collective bargaining. The union says Uber drivers may be owed backpay for lost wages, holiday pay and other entitlements.
“This is a landmark legal decision not just for Aotearoa but also internationally,” said Anita Rosentreter, First Union strategic project coordinator, in a statement.
Uber said it was “disappointed” by the Employment Court’s decision and will be filing an appeal.
“This ruling underscores the need for industry-wide minimum standards for on-demand work, while preserving the flexibility and autonomy that drivers tell us is important to them,” an Uber spokesperson told TechCrunch. “We will continue to work collaboratively with industry and the New Zealand Government throughout the contractor policy reform process.”
A spokesperson for the company also told The Guardian that it was “too soon to speculate” how the court ruling would affect the company’s operations in New Zealand more broadly.
The decision in New Zealand is the latest in a string of international cases where workers have fought for employment rights from gig economy companies. Last December, the U.K. High Court dealt a massive blow to Uber by declaring the business was unlawful and by classifying gig workers as “workers,” a new classification that allows for the flexibility of independent contract work and the rights of employee status.
Last year, an analysis from the International Lawyers Assisting Workers Network, a membership organization of trade union and workers’ rights lawyers, showed gig companies like Uber and Deliveroo had faced at least 40 major legal challenges in 20 countries, including Australia, Brazil, Canada, Chile, South Korea and across Europe.
This article has been updated with a comment from Uber.