In a recent decision, New Zealand’s Employment Court ruled that a driver for human cloud ride sharing firm Uber was an independent contractor and not an employee. The case could have an impact on the gig economy in New Zealand.

Atapattu Arachchige drove for Uber in Auckland between May 2015 and June 2019 and has claimed he was unfairly dismissed. During this period, he entered into a shared services agreement with Rasier NZ, a New Zealand company and member of the Uber group of companies.

The Services Agreement provided that Arachchige was “an independent provider of peer-to-peer passenger transportation services. Furthermore, by providing transportation services to passengers, a legal and direct business relationship was created between Arachchige and the passengers.

The agreement further provided that Rasier NZ’s provision of the Uber services created a legal and direct business relationship between Rasier NZ and Arachchige and Uber BV’s licence to him of the Driver App created a legal and direct business relationship between Uber BV and him. It also stated that neither Rasier NZ nor Uber BV was deemed to direct or control him generally in his performance under the agreement, including in connection with his provision of transportation services.

Arachchige accepted 5,623 of the trip requests sent to him via the Driver App and rejected 448 trip requests sent to him. He also cancelled 156 of the trip requests that he had received and accepted.

Arachchige’s access to the Driver App was deactivated in June 2019 after Uber received a complaint from a passenger. Although Uber said it investigated the complaint, Arachchige says he did not have any knowledge of the details of the complaint, nor was he given any opportunity to provide a response. This deactivation ended Arachchige’s association with Uber and formed the basis of his claimed personal grievance for unjustifiable dismissal.

Prior to Arachchige becoming an Uber driver, he was a taxi driver under an Alert Taxis franchise. After Uber set up its rideshare business in New Zealand, Arachchige realised that taxi driving work was reducing and decided to move to Uber, selling his Alert Taxi business.

In the ruling, Judge J C Holden said Arachchige’s Services Agreement was not, in form, an employment agreement, adding that the Services Agreement entered into between Uber and Arachchige does not suggest an employment relationship.

According to the decision, while the Services Agreement is personal to the driver signatory, it did not require exclusivity; drivers are not to display any Uber logo or other signage and Uber drivers are able to undertake other activities, including in competition with Uber.

“In the written agreement, the parties expressly agree that it is not an employment agreement and that it does not create an employment relationship,” Holden said in the ruling.

“Arachchige did not go through an employment recruitment process; there was no ‘vacancy’ Uber was looking to fill. Indeed, Uber does not place a limit on driver numbers, essentially if a person meets the identified criteria, Uber is prepared to enter into a services agreement with them,” Holden continued.

“The principal argument for Mr Arachchige to be an employee was the lack of control that he had over building a customer base and over determining what fare to charge. The two are inter-related. As noted, there was, in theory, an ability for a driver to charge a passenger less than the quoted price, but without the ability to establish a relationship with passengers, and thereby attract future work, this was of no value to Mr Arachchige. This was the principal difference between the Uber model and the arrangements Mr Arachchige had with Alert Taxis.”

On balance, the Court found there was no employment relationship which meant that Arachchige was not entitled to bring a personal grievance for unjustifiable dismissal.

Commenting on the decision, Fiona Coombe SIA’s director of legal and regulatory research said: “This case was decided on the specific facts and therefore does not present a precedent for all Uber drivers or indeed other gig workers in New Zealand. However, it is interesting to note that similar facts can result in different outcomes across the many jurisdictions that Uber operates in. The judge in this case seems to have considered the intention between the parties that the arrangement should be a business relationship, rather than employment to be the significant factor in his decision.”

To read the full decision, click here.