Four Uber drivers have successfully challenged their contractor status, with the New Zealand Supreme Court ruling that they are employees.

In reaching its decision, the Court looked past the written contracts and focused on how the relationship actually works in practice. It highlighted that:

• Passengers see themselves as using Uber, not hiring a driver directly.
• Uber sets and enforces rules, including policies, performance standards, and use of the app.
• Uber controls key aspects of the work, including fare prices, how rides are allocated, and driver ratings. Drivers cannot set their own prices or meaningfully control the volume or type of work they receive.
• Drivers are integrated into Uber’s business – they are the visible face of the service and central to how Uber earns income.

Implications of the decision

• This could be a precedent-setting decision.
  While the ruling is specific to the four drivers involved, it sets a strong precedent for similar claims.
• It reaffirms established law.
  The Court confirmed the approach from Bryson v Three Foot Six (2005) — the real nature of the relationship overrides whatever the written agreement.
• Contracts still matter, but not decisively.
  Written agreements and stated intentions will be considered, but the weight they carry depends on the overall circumstances and how the relationship operates day-to-day.
• There could be tax implications for individuals.
  If someone has been treated as a contractor but is later found to be an employee, deductions claimed for business expenses (e.g., WOF, tyres, vehicle costs) may become problematic.
• There could be cost implications for businesses.
  Employers may be liable for minimum entitlements such as minimum wage, sick leave, holiday pay, and potentially back-dated payments if a contractor is reclassified as an employee.

Why it matters

Being an employee comes with minimum legal protections, including sick leave, holiday pay, and minimum wage. If these aren’t provided because someone is treated as a contractor, and that treatment is later challenged, the financial and compliance consequences for the business can be significant.

It is essential to review not only your contracts and how you label contractors, but what the relationship actually looks like in practice. There must be a clear distinction between your employees and your contractors.

What’s Next?

A proposed change to New Zealand’s employment legislation would introduce a gateway test to help determine whether someone is a contractor or an employee. This test is intended to offer more certainty, but it does not replace the traditional common law tests. Factors such as intention, control, integration, and the fundamental reality of the relationship will all remain relevant.

Our advice

Now is a good time to:

• Review your contractor agreements;
• look at how those relationships operate in practice; and
• make sure your contractors truly meet the legal definition of a contractor.

If you’re unsure, we’re happy to assist. Contact our team at: admin@cmalaw.co.nz.

Disclaimer: This update provides commentary on employment law, health and safety and immigration topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.