The Supreme Court has confirmed that four Uber drivers are employees, not independent contractors, of the ride-share giant.
However, for the many workers who have filed challenges to their employment status pending the outcome of this decision, the upcoming legislative changes will likely see the brakes pulled.
Although the case relates to the gig-economy, the principles have implications for any sector, including retail, where contractors are engaged.
Legislative and Legal Background
These proceedings were commenced back in 2022, when the four drivers, through their trade union, E Tū Incorporated, challenged their employment status in the Employment Court.
Employment challenges are made pursuant to section 6 of the Employment Relations Act 2000 (“the Act”) which defines what an “employee” is. Employee status is the gate which a worker must pass through before they can access minimum entitlements such as holiday pay, sick leave, and the ability to raise personal grievances.
The Supreme Court relied on the long-standing Bryson v Three Foot Six[1] decision, which set out four key tests for determining employment status: intention, control, integration, and fundamental/economic reality.
[1] [2005] NZSC 54.
The majority of the Supreme Court found that Uber exercised a very high degree of control over its drivers whenever they were logged into the Uber app. The Court noted that even though Uber categorised its drivers as contractors running their own businesses, the drivers had limited control over key aspects of their work, including the quantity and quality of trips available to them and the price they were paid.
Although Uber drivers are not integrated into Uber’s business in a ‘traditional’ sense, the Court held they were effectively the face of the business. Without drivers, Uber could not operate, making the relationship one of “co-dependence”.
Importantly, the Court recognised that modern work arrangements, especially those through online/remote work, may involve new ways of exerting control. The fact that control is exercised through an app rather than a supervisor does not make it any less relevant or potent to the assessment of ‘control’ when determining employee status.
For retailers using contractors (for example, IT support, security, or in-store brand representatives) the decision is a timely reminder that the courts will look beyond labels (e.g. “independent contractor”) to understand how work is actually structured.
Government Response
While the decision is a win for the four Uber drivers involved, its wider impact may be limited by upcoming legislative changes. The Government is moving ahead with the proposed “contractor gateway” test under the Employment Relations Amendment Bill. The test is designed to provide a clearer, more objective criteria for when a worker is deemed an independent contractor.
Under the proposed framework, a worker will be a contractor, and unable to challenge their status, if all the following criteria are met:
- there is a written agreement that specifies the worker is an independent contractor;
- the worker is not restricted from working for others;
- the worker is:
- not required to be available to work certain times or days or for a minimum period; or
- able to sub-contract the work; and
- the business does not terminate the arrangement if the worker does not accept an additional task.
This change is expected to create more certainty for businesses that engage contractors. The Bill is currently before the Select Committee, with the Education and Workforce Committee report due on 24 December 2025.
What Retailers Should Do Now
Retailers who engage independent contractors should take this opportunity to review their working arrangements and contracts. The Uber case reinforces that simply calling someone a contractor and having a contract that labels them one, does not necessarily make them a contractor. At the same time, the proposed gateway test provides clarity on how to shape your contracting arrangements. Looking to include these provisions in your contracts going forward is recommended.
Ensuring both your contracts and day to day business practices align with the proposed requirements of the contractor gateway test will be crucial to maintaining certainty that a worker is an independent contractor and will mitigate the risk of misclassification.
Ford Sumner is Retail NZ’s legal partner. Ford Sumner’s legal services are provided at competitive rates and Retail NZ members are entitled to a 10% discount on Ford Sumner’s standard hourly rates. If your business would like legal assistance with this issue, you can contact Ford Sumner at retail@fsl.nz.
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[1] [2005] NZSC 54.