4 mins to read

Could Uber NZ drivers strike, as threatened?

It depends on their employment status, which one expert says is s finely balanced question. With special feature audio.

Tue, 03 May 2016

A group of Auckland-based Uber drivers is threatening to strike if the company does not reverse a recent 20% fare cut, and moves to make it easier and cheaper to become an Uber driver that will swell the numbers of those chasing passengers.

The group might be using “strike” in a loose sense.

But to literally go on strike, in a concerted industrial action, they would have to convince the Employment Relations Authority that they are not contractors but Uber employees.

That has become a key question for Uber drivers worldwide: contractor or employee?

“Uber is doing everything it can to prevent that question being asked,” says Jennifer Mills, an employment law specialist and partner at Anthony Harper.

That includes paying out big bucks to avoid a precedent being set in court.

Last week, Uber headed off two class action lawsuits on the contractor vs employee questions – one brought by Uber drivers in California, the other by drivers in Massachusetts – by agreeing to an arbitration process that could see up to $US100 million in payouts through an arbitration process that includes payments of up to $US8000 per driver.

The US drivers wanted entitlements that go along with employee status, including the right to not be summarily dismissed (by settling out of court, they have not had that right guaranteed, though now at least they can get a payout).

Could it happen here?
Would a New Zealand court define Uber drivers as employees?

Ms Mills notes for starters, California starts with a presumption of employment.

Here, a legal action to define employment – the most applicable being a case to define the status of contract couriers – depends on a series of questions and tests designed to reveal the reality of a contract.

“Uber NZ has a very clear contract and that says its drivers are independent contractors who are required to supply their own vehicle,” Ms Mill says. And terms and conditions will definitely be a factor in any legal ruling on Uber drivers’ status. However, a court can be willing to look beyond “a label” if it does not match the reality of a situation.

One test is “control.” Here, Uber has argued it rules its drivers with a very light hand. Anecdotal evidence indicates that’s very much the case. 

A related test is, “is a person working on their own account?” Again, this one seems pretty clear cut. Uber drivers can work whatever hours they like. Their remuneration or “profit” as automotive entrepreneurs, in Uber-speak, depends on the hours they’re willing to work, the days they’re willing to work and where they’re willing to work, and so forth.

Another test is the level of “integration.” This can range from the minor, such as whether staff are given business cards and equipment, to the major: Could a business run without its “contractors”. Here, Uber tried to argue in an earlier US case that it was purely a technology company. That argument didn’t wash and Ms Mills says it probably wouldn’t win the day here; Uber clearly depends on its drivers to do business. That seems a strong argument but Ms Mills notes no single one of these tests is determinative in itself.

“Courts are disinclined to go against industry practice,” she says – and bear in mind there’s the precedent of courier drivers who failed to win employee status despite it being problematic to run a courier company without couriers.

Win or bust
One thing is for sure: Uber will fight hard to avoid or win any legal action.

“The model for Uber only works where the costs associated with the administration of a vehicle lie with the drivers,” Ms Mills says.

Any finding in New Zealand in favour of drivers would have global implications for the company.

She says that, on balance, any legal action taken by Uber drivers in New Zealand will be less likely to succeed than in California.

But it’s no done deal. The integration test hints at an argument for employment status. But Ms Millss also notes that “It’s one of these more modern working relations ships that doesn’t fit neatly into previous test cases.”

The law hasn’t kept up with flexible work arrangements underpinned by new technology such as Uber’s app, she says.

Just as Uber’s arrival has led to a review of taxi industry regulations, it could also spur some employment law reform.

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Could Uber NZ drivers strike, as threatened?