Uber may be forced to review contracts for NZ drivers

A law suit in the US which aims to prove that drivers working for the ride-share app Uber are employees and not self-employed contractors could have implications for the company’s New Zealand operations.

If the court rules in favour of the drivers it would mean Uber having to compensate 160,000 drivers for tips and mileage. Bloomberg reports that the first battle for Uber happens today when a judge will decide whether to grant the law suit class action status.

Clearly for Uber it would open up claims for all the benefits and protection that is offered to employees that self-employed contactors are not entitled to.

Here in New Zealand the outcome of the case will likely prompt Uber, and other firms relying on contractors, to review their contracts and to remove any ambiguity about whether workers are employees or genuinely self-employed contractors.

Ben Thompson, an employment law specialist with Hazel Armstrong Law told the New Zealand Herald that although the US case and court decision will have no direct effect here, and will not set a precedent, it will be used as an example in New Zealand courts.

Thompson says that many of the operational systems and procedures used by Uber do point towards a company-employee relationship rather than one of employee-contractor.

This includes fixed pricing by the company, rules prohibiting the acceptance of tips and the fact that all business is arranged by the company with no option for the drivers to find their own business.

Since the financial crisis many businesses have expanded their use of self-employed contactors, in some cases re-hiring those who were previously employees.

This latest high-profile case being viewed on the global HR stage should serve as a reminder of ensuring that all contractor relationships are water tight in terms of legislation, insurance and tax implications.