A Turning Point for Worker Rights – Why Proposed Contractor Law Misses the Mark
The Supreme Court has delivered a landmark ruling: Uber drivers are employees, not contractors.
The Court unanimously dismissed Uber’s appeal, affirming that the real nature of the relationship, not the wording of a contract, determines employment status under the Employment Relations Act 2000.
For affected drivers, this decision unlocks access to minimum wage, holiday pay, sick leave, and KiwiSaver, and may impact thousands of gig workers across New Zealand.
Why This Matters
This ruling is a watershed moment for employment law in New Zealand. It reinforces a principle long embedded in our system: substance over form. Despite claims of flexibility, the Court found Uber exercised significant control over fares, customer interactions, and disciplinary processes—hallmarks of an employment relationship. If a business controls how, when, and at what price someone works, it may well be their employer.
Proposed Employment Relations Amendment Bill
Workplace Relations Minister Brooke van Velden has proposed legislation introducing a 'gateway test' that would lock workers into contractor status if four criteria are met:
A written agreement stating they are an independent contractor.
Freedom to work for others.
No obligation to work set hours (or ability to subcontract).
No penalty for refusing extra tasks.
If all four criteria are satisfied, the worker cannot challenge their status. Critics argue this undermines the Court’s ability to assess the real nature of the relationship, prioritising contractual wording over reality and stripping workers of the right to contest exploitative arrangements.
The Inherent Unfairness
While the gateway test appears to offer clarity, it creates a legislative straitjacket. It removes judicial oversight and assumes written agreements reflect genuine bargaining—ignoring power imbalances and economic pressures that force workers to accept terms they cannot negotiate. This reform tilts the balance heavily toward businesses:
Erodes judicial oversight: Judges would be barred from applying common law tests if the gateway criteria are met.
Ignores inequality of bargaining power: Workers often sign contracts under economic pressure, with little ability to negotiate terms.
Creates a two-tier workforce: Gig workers risk being locked out of basic protections, even when their work mirrors traditional employment.
Implications and Commentary
Although the Supreme Court ruling applies to four drivers, its ripple effect could reshape the gig economy. If the Amendment Bill passes, it may neutralise these gains for future workers. Businesses call this 'certainty'; unions call it an attack on rights. At BuckettLaw, we call it a step backward for fairness. Employment law should evolve to protect vulnerable workers, not entrench power imbalances.
Alternative Solutions
Instead of a rigid gateway test, New Zealand could adopt a more balanced approach, similar to the UK model:
Introduce an intermediate 'worker' category granting minimum wage and holiday pay without full employee obligations.
Retain judicial oversight so courts can assess the real nature of the relationship while respecting parties’ intentions.
Codify key tests (control, economic dependency, ability to subcontract) to guide classification and reduce uncertainty.
Encourage hybrid models like the UK’s 'Self-Employed Plus,' offering minimum guarantees while preserving flexibility.
This decision should serve as a wake-up call for lawmakers. The gig economy is here to stay, but so is the need for basic protections. Instead of locking workers into contractor status through rigid tests, Parliament should craft legislation that reflects reality, not rhetoric. A balanced framework—one that preserves flexibility while guaranteeing minimum standards—will ensure New Zealand leads in fairness, not falls behind. The time to act is now.
