Court sends message on gig economy

A UK court ruling that Uber drivers should be paid a living wage could have major implications for the gig economy around the world, including New Zealand, where the Government is looking at reforms to protect vulnerable workers seen as ‘‘dependent contractors’’.

In a landmark decision this week, the UK employment court said Uber drivers were not selfemployed and should be paid a living wage and holiday pay. This is the third time that British workers have won their case against Uber, this time in the court of appeal.

The decision could have a big effect on the gig economy in the UK, where the number of non-employer businesses in the private sector has risen 25 per cent since 2010, with a corresponding rise in the number of freelancers.

The ruling is likely to have deep implications for companies operating on similar business models, which could now be forced to pay workers more. As Uber has argued, the related increase in costs and potential taxes would inevitably be passed on to the consumer.

Australian lawmakers have decided that Uber drivers should not be treated as employees because they can choose when and how much they want to work.

Wellington-based employment lawyer Susan Hornsby-Geluk said the UK Court found that the Uber drivers were ‘‘workers’’, which is a third category that falls somewhere between employees and independent contractors. They get some, but not all, of the benefits of employment.

‘‘In New Zealand we do not yet have a ‘third category’ such as this, but the Labour Party have previously said that they are looking to introduce a ‘dependent contractor’ grouping. This has been discussed largely in the context of film workers up until now, but Uber drivers are another very good example of a group that might slot into this category.’’

However, whether someone is classed as an employee or contractor is not always straightforward to establish, as courts would look beyond a written agreement at less tangible factors that define the nature of the relationship, including how integrated the worker is into the business.

Until the law is changed to provide for ‘‘dependent contractors’’, Uber drivers in New Zealand would still have difficulty convincing the Employment Court that they should be regarded as employees, said Hornsby-Geluk.

‘‘Given the increase in nontraditional employment type arrangements, and the current inequity between employees and contractors, it is an area that requires urgent attention.’’

Uber in New Zealand has 6500 driver partners and 3300 delivery partners.