Cases of interest: August 2024

Rasier Operations BV v E tū Inc [2024] NZCA 403

Court of Appeal – Employment status – Uber drivers

At issue was whether Uber drivers were employees under section 6 of the Employment Relations Act 2000 (Act).

The five appellant companies (collectively referred to as Uber) provided an app that facilitated people who wanted a ride, or to have food delivered, to connect with drivers in their area. Uber argued the drivers were not employees, but “independent providers of transportation services to ‘riders’ and ‘eaters’, with whom they enter into contracts using software and facilitation services provided by the Uber companies” (see paragraph 1). Before gaining access to the app, the drivers entered into a driver agreement that said it was “not an employment agreement, and [did] not create an employment, independent contractor or worker relationship ... joint venture, partnership or agency relationship” (see paragraph 164).

The Court of Appeal found the drivers were employees (see paragraph 236). In doing so, the Court of Appeal considered:

• Section 6(3) of the Act specifies that the court is not to treat any written agreement between the parties as determinative of the real nature of their relationship. The Court of Appeal noted this was a response to a perception that cases decided before the Act was enacted “gave too much emphasis to the way in which the parties’ contract described the relationship” (see paragraph 96).
• The drivers had no ability to negotiate the driver agreement or any other document or policy during their engagement with Uber (see paragraph 165). If they did not agree, they would not be given access to the app. The Court of Appeal regarded that type of “take it or leave it” contract as less likely to reflect the parties’ intentions about their relationship. Under section 238(external link) of the Act, parties cannot choose to contract out of the Act (see paragraph 112).
• The common intention of the parties was found in the provisions that showed (see paragraph 218):
  • The drivers had no ability to make any decisions about the terms of the service they provided.
  • The high level of control Uber had over the drivers. 
• The drivers could choose when they logged off from the app which was “inconsistent with employment at those times” (see paragraphs 190 and 221).
• Drivers could not charge more than Uber quoted riders (see paragraph 156). Drivers could not arrange for someone else to cover for them (see paragraph 170). Only when drivers had achieved “diamond status” in Uber’s reward incentive scheme were they informed where the rider wished to go (see paragraph 192). Uber used the rider rating system to manage performance and make termination decisions (see paragraph 197).
• While a driver was logged in to the app, they did not have any opportunity to increase their income, build business goodwill of their own or influence the quantity or quality of work they received. Nor could they bargain with Uber for any of those. The Court of Appeal found they could not therefore be considered to be carrying on business on their own account (see paragraph 234).

The Court of Appeal found that Uber’s driver agreement was “window dressing” designed to point away from the employment relationship that existed (see paragraph 204). 

The Court of Appeal acknowledged that its decision would have broader implications on how the section 6 tests of an employment relationship are applied to work arising from online platforms (see paragraph 20). However, it said it would be necessary to apply section 6 to each platform, paying attention to both the contractual arrangements and how they operated in reality (see paragraph 208).

Rasier Operations BV v E tū Inc [2024] NZCA 403(external link)

MW v Spiga Ltd [2024] NZEmpC 147

Employment Court – Non-publication orders

At issue was whether the employee would be granted non-publication so that his name would not be published in decisions about his employment matter. 

The parties attended employment mediation with the Ministry of Business, Innovation and Employment. They came to an agreement and signed a record of settlement which was then signed off by the mediator in accordance with section 149(external link) of the Act. The Employment Relations Authority (Authority) found the employer breached a confidentiality clause in the record of settlement by discussing it with another person. The Authority ordered the employer pay a penalty of $1,000. However, it declined to order non-publication of the employee’s name. The employee challenged that decision to the Employment Court (Court).

In a majority decision, the Full Court found the employee should be granted non-publication over his name. The majority confirmed the general rule, as expressed in Supreme Court case Erceg v Erceg [2016] NZSC 135(external link), that open justice is of fundamental importance and “the party seeking the [non-publication] order must show specific adverse consequences that are sufficient to justify an exemption to the fundamental rule … the standard is a high one” (see paragraphs 16 and 86).

The majority set out a two-part test:

1. Firstly, there must be “reason to believe that the specific adverse consequences could reasonably be expected to occur” (see paragraph 88). 
2. Secondly, the “Authority or Court must consider whether the adverse consequences that could reasonably be expected to occur justify a departure from open justice in the circumstances of the case” (see paragraph 89). The Court said this part is a weighing exercise and gave a list of potentially relevant factors (see paragraph 94):
   1. the circumstances of the case;
   2. the interests of the person or entity applying for a non-publication order;
   3. the interests of the other party or parties to the litigation;
   4. the interests of any third party;
   5. the public interest, including the rights of media;
   6. any further issues of equity and good conscience; and
   7. tikanga and its principles, values, or concepts.

The Court ordered non-publication of the employee’s name. The majority took into account that:

• The parties were members of a small community in New Zealand (see paragraph 101). 
• “Tikanga would suggest that the consequences to MW of the hara [breach], including the risk of MW experiencing whakamā [shame], should not be exacerbated by further publication” (see paragraph 102). 
• To decline non-publication would detract from the “settlement the plaintiff had achieved, and [undermine] the importance of mediation” (see paragraph 104).

MW v Spiga [2024] NZEmpC 147(external link)

Rookes v Tillmans Fine Furniture Ltd [2024] NZERA 504

Employment Relations Authority – Fixed term agreement – 90-day trial – Personal grievance – Unjustified dismissal

The main issue was whether an employee was unjustifiably dismissed when her 2-month fixed term contract expired, in circumstances where she had been offered the fixed term contract after being dismissed on a 90-day trial.

The employee was employed as a sales consultant on a permanent contract that included a valid 90-day trial under section 67A(external link) of the Act. The employer terminated the employment within the first 90 days because the director considered the employee’s product knowledge had not grown quickly enough (see paragraph 45). However, the director of the employer felt he had a “moral duty” to give the employee a chance to find alternative employment as it was 12 days from Christmas. He therefore offered her a 2-month fixed term employment agreement. 

Section 66(2)(external link) of the Act requires the employer to have “genuine reasons on reasonable grounds” for specifying that a fixed term role will end. The Authority found there were two reasons the fixed term did not meet that requirement in this case. Firstly, it would have been appropriate for the employer to follow a performance improvement process to address any shortcomings in the employee’s product knowledge. Secondly, the employer needed a sales consultant beyond that 2-month time frame (see paragraphs 48–49). As the Authority found the fixed term agreement did not meet the requirements of section 66, the employer could not rely upon it. The employee’s dismissal was therefore unjustified under the test in section s 103A(external link) (see paragraph 50).

The Authority ordered the employer to pay the employee $15,000 in compensation and $2,625 in lost wages (see paragraph 81).

Rookes v Tillmans Fine Furniture Ltd [2024] NZERA 504(external link)

Rasheed v Commissioner of Zayed College for Girls [2024] NZERA 516

Employment Relations Authority – Interim reinstatement 

At issue was whether the Authority would reinstate a school principal to her role on an interim basis.

The employee was principal of a state integrated high school for 14 years. In recent years the relationship between the management and governance of the school worsened. The Board of Trustees began a disciplinary investigation regarding the principal but did not complete it. The Board of Trustees was then removed and a commissioner appointed. The commissioner conducted a staff survey. The results included some criticism of the principal’s leadership. The commissioner initiated a competency process. The principal raised a personal grievance under s 103(1)(b)(external link) of the Act on the grounds that unjustified actions of the employer had disadvantaged her. The commissioner concluded the competency process as she was happy with improvements made by the principal. While the principal was on sabbatical leave, the commissioner received further complaints from staff about her leadership and health and safety concerns due to the work environment. The commissioner suspended the principal while an independent investigation was undertaken.

The employee asked the Authority to reinstate her to her position as principal on an interim basis pending the outcome of the investigation and the resolution of her personal grievance. The Authority reinstated her for the following reasons:

• It was seriously arguable the commissioner had not complied with the employer’s obligations under the collective agreement before suspending the employee. There was an “apparent lack of enquiry” by the commissioner into the original complaints and failure to ask the principal for her response before making the decision to suspend (see paragraphs 30–31).
• The employee’s personal grievance claim was therefore arguable (see paragraph 32).
• The employee had been the principal for 14 years and therefore had the skills and experience to undertake the role (see paragraph 38). 
• If the suspension was later found to be unjustified, it was not likely that damages could sufficiently compensate the employee for reputational harm (see paragraph 45).
• Overall justice in the circumstances was best served by upholding the obligations on the employer in the collective agreement (see paragraph 52).

The Authority ordered the suspension be lifted with immediate effect (see paragraph 53).

Rasheed v Commissioner of Zayed College for Girls [2024] NZERA 516(external link)