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Uber, The ‘Lure’ And Carve-outs

Employment Court judge Christina Inglis in a landmark decision ruled that four Uber drivers were employees and not self-employed contractors has opened the gate for many other drivers to seek the protections of employment law. This follows a successful case taken by two unions – First Union and E tū.

The case is well covered by Rebecca Macfie in her 26 October Newsroom article:  Flood gates open for Uber drivers. In my view Macfie is New Zealand’s most considered and insightful journalist on unions, unionism (there is a difference) and employment relations.

What’s landmark about the Court decision

The implications and benefits of this decision, such as the right to collective bargaining, backpay, annual leave and sick leave along with several other better working conditions, are considerable. But they go beyond Uber drivers to other so-called contractors in similar circumstances.

These similar circumstances centre on what is often described as the ‘control test’. That is, the Employment Court concluded that, such was the degree of control that Uber had over its drivers, calling them self-employed contractors constituted a “misclassification”. Instead they were employees denied the basic rights of employment protection because of this “misclassification”.

The Court recognised the considerable lengths that Uber and other platforms went to claim their drivers were not employees and therefore not entitled to employment rights and protections. Uber was not, as it claimed, simply a facilitator in the market. There was a sufficient level of subordination and dependency to reject Uber’s defence.

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Macfie noted that the Court’s decision was consistent with earlier case law, including the leading case in which the Supreme Court found James Bryson, a former model-maker on The Lord of the Rings films, to be an employee and not a contractor. Film producer Peter Jackson was livid over this decision.

Further, the Uber decision followed “…a succession of international cases that have sought to rein in Uber’s use of drivers as contractors to avoid employment law.” This includes the United Kingdom, France, Netherlands and Switzerland, where courts have ruled that Uber drivers were employees.

The flood that the gate has opened is the opportunity it provides Uber drivers in similar ‘subordination and dependency’ circumstances to join and be collectively and individually represented by a union. The flood gate also potentially extends to other industries where the same circumstances exist.

But: a warning from Bryce

Drawing upon Macfie’s excellent article and other commentary, academic and political commentator Bryce Edwards published his own analysis in the Democracy Project (26 October): Uber court ruling a major victory against worker exploitation.

It is an insightful piece of writing that is pretty much on the mark (almost). In particular, Edwards observes that:

…Labour had been looking to deal with the problem of vulnerable workers being legally categorised as contractors by creating a new hybrid legal category of “contractor-workers”. These employees wouldn’t have the full rights of workers, but would have better conditions than contractors. It was a compromise solution, which is actually inferior to what the Employment Court ruled yesterday. Hence, it can be said that the Government and Wood are pushing for something less progressive than the courts.
 Uber and other employers are likely to lobby the Government to continue with this “solution”, which might avoid them having to afford full employee status to all their workers. And yesterday the following was reported: “Uber says it supports reform and believes the only way workers and platforms can have certainty is if change is made through the parliamentary process rather than by the Employment Court.”

It is hard to dispute this analysis except that elsewhere in his article he refers to employment relations minister Michael Wood as wanting to create an inferior ‘contractor-worker’ category. This is mistaken. He’s got the wrong guy.

Hobbits and carve-out

The Bryson-‘Lord of the Rings’ case mentioned above is the trigger point. Peter Jackson desperately wanted to maintain the level of control he thought he had over his film production workforce until the Supreme Court said otherwise.

This was the driving force behind Jackson’s hard-line aggressive approach taken in the notorious subsequent Hobbit dispute in which he levered the then National government to passing special legislation to ensure that Jackson’s workforce were subordinate and dependent contractors lawfully. A good example of the difference between law and justice!

In opposition Labour promised to repeal the Hobbit law. But in government they and the Council of Trade Unions led by its President Richard Wagstaff were effectively lured (outmanoeuvred) by the film industry and Ministry of Business Innovation and Employment.

They agreed, through the Screen Industry Workers Bill, to carve out the film industry from the employee protection of the Employment Relations Act, as reinforced by Employment Court decisions. I discussed this in depth in an article published by the Democracy Project 30 July 2020: Film industry bosses get their way with reformed hobbit law.

Essentially there is a trade-off between contractor collective representation and the loss of the right to full employee protection. The film industry is carved out from the greater protections of the Employment Relations Act. The Bill has only recently been passed and the new Act comes into force at the end of the year.

Much of the reason for the delay has been behind-the-scenes endeavours by Michael Wood to not proceed further with it because of the wider implications, including precedent, of carving out a section of the workforce from the protections and rights of the Employment Relations Act. Unfortunately Wagstaff had greater sway over Cabinet than him. Wood was an inheritor rather than initiator of the bill.

If the hobbit law had simply been repealed then, given the decisions made on contractor versus employee status by the Employment Court (especially now reinforced by the Uber decision), screen industry workers would be in a stronger legal position than under the new Act.

Ironically MBIE, Business NZ and the CTU have produced an interesting quality paper proposing capturing in legislation the underlying premise of Employment Court decisions on contractor versus employee status.

Uber’s next steps

Uber is certain to appeal the Court’s decision although its prospects appear unlikely. However, Bryce Edwards’ article points to anticipated moves by Uber to head-off the success of the First and E tū unions by entering into what would amount to another carve-out initiative.

While Richard Wagstaff has welcomed the Court’s Uber decision for all the right reasons, there is concern that he could be lured into this approach as he was with screen industry workers. After all, if its good enough for them surely its good enough for gig workers!!!

The greatest protector against this succeeding is that both the unions who took the successful case to the Court are street-wise and battlers. Neither would they be pressured by Uber to accept an outcome less favourable than what they achieved in court after a hard fought struggle.

The unions will need to ensure that the CTU top leadership is not lured into engaging in activities which end up having a life of their own and going down the carve-out path. They are tough enough to prevent this.

If there is a gig/Uber carve-out, what part of the workforce is next. Salaried medical specialists? The first and arguably biggest fight I had when representing the Association of Salaried Medical Specialists was against concerted attempts in the early to mid-1990s to deny them access to collective bargaining (in the context of individual contracts).

All it takes is for the right ideological stars and leverage to align for this sort of thing to happen.

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