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 nonemployer 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.

The European Court of Justice is set to rule on how Uber is classified within the European Union – as an app or a service. Meanwhile, 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 that in New Zealand, Uber drivers were classed as freelancers. 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.

The New Zealand Government has been looking at how independent contractors working under the control of companies such as Uber should be classified.

There has been speculation that the UK model could be adopted, creating another category of ‘‘dependent contractors’’, who would benefit from some of the same rights as employees – such as holiday pay or sick leave. No announcements have been made but the Government has signalled its intention to make changes.

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

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