Uber asks for its legal protection to be backdated

In a submission to the Education and Workforce select committee representatives of Uber have not only asked that New Zealand workers be stripped of their rights but that this be done retrospectively.  Such a submission is probably unique in New Zealand employment law, and very unusual generally. Even the Government’s pay equity reforms, although preventing workers from initiating or continuing pay equity claims, did not cancel agreements that had already been entered into and finalised.

In a submission a few days ago representatives from Uber appeared before the Education and Workforce select committee, currently hearing submissions of the Employment Relations Amendment Bill, to make the extraordinary argument that subpart 1 of the Bill be made retrospective. Subpart 1 of the Bill is of course the “Uber Clause”, a clause specifically tailored for (and probably by) Uber to ensure that its drivers are not classified as “employees” and thus not entitled to minimum employment standards such as the minimum wage and annual holidays.

Retrospective legislation is, quite rightly, extremely rare as its effect is usually to remove or limit a person’s legal rights, not in the future but in the past. In criminal law of course such legislation is largely unthinkable but somewhat less so in civil law. A recent, and widely criticised example is the the Credit Contracts and Consumer Finance Amendment Bill which is intended to protect banks from a multimillion-dollar compensation claim for loan disclosure mistakes they made between 2015 and 2019. There is at least some logic in that example given that the proposed change had been enacted in 2019 but without retrospective effect.

That argument cannot be applied in the Uber situation – the current statutory definition was enacted 25 years ago and the interpretation of the provision established by the Supreme Court in Bryson v Three Foot Six Ltd in 2005. The law was well established when Uber came to New Zealand in 2014 and it might be expected that Uber would have been well aware of the legal risk being taken in implementing its business model in New Zealand.

Uber's business model has been designed to try and avoid any employment relationship between drivers and Uber – Uber’s terms and conditions not only provide that drivers are not employees but also that they are not contractors. The Uber Services Agreement makes this clear:

“This Agreement is not an employment agreement, and does not create an employment, independent contractor or working relationship (including from a labour law, tax law or social security law or insurance perspective), joint venture, partnership or agency relationship.”

The risk of workers being held to be employees is one not one confined to New Zealand. Instead they argue that their app is designed to assist independent businesspeople find and interact with customers. A bit like a dating app except that most dating apps don’t require you to go out with anyone who responds to your post, don't tell you what you must wear on the date and don’t cancel the date just as the it gets interesting. Any examination of the Uber model makes it clear that the relationship is effectively an exploitative one that gives Uber total control over all facets of its use. The only slight distinction is the ability to log off the app. That merely reflects modern modes of employment – and of course a day labourer decades ago was not required to turn up every day. So nothing new there. Courts in both New Zealand and elsewhere have not found it difficult to discern the economic reality of the relationship behid the legal facade.

Uber took what they should have known was a legal gamble and lost. Having lost they now seek to have Parliament insulate them from the consequences of that gamble.

The amendment proposed by Uber would strip the legal rights of Uber drivers who, quite sensibly, may have been waiting for the decision of the Supreme Court in Raiser Operations BV v E Tū Inc to be issued before initiating legal proceedings to recover money owed to them as employees. Should the Supreme Court uphold the decision of the Employment Court and Court of Appeal it is likely that Uber would have needed to come to some form of settlement with drivers who did not receive the equivalent of the minimum wage and other minimum entitlements. Retrospective application of subpart 1 will strip drivers of the rights they hold under current law and allow Uber to gain the benefit of their unlawful employment practices.

Of course none of this would be an issue if Uber (and other employers) provided adequate levels of remuneration and other entitlements for their workers. Contractors earning $40 an hour are rarely if ever seen challenging their employment status (unless to bring themselves within the personal grievance provisions of the Employment Relations Act).

The minimum employment standards, particularly the Minimum Wage Act and Holidays Act, were first enacted at a time contracting was relatively rare. The expansion of devices such as contracting, and Uber’s “facilitation” model, have been developed as legal tactics to evade what Parliament decided should be the minimum floor for those dependent on another entity for their and their family’s economic security.

Parliament would be better employed ensuring that this protection remains effective rather than kowtowing to multi-billion international corporates who can well afford to pay adequate remuneration. The Government’s response will presumably become clear when the select committee reports/