Worker status litigation

The gig-economy continues to expand in New Zealand (and globally), and so does litigation over worker status. For this reason, worker status remains front of mind for many workers and organisations (both public and private employers/engagers). The steady flow of worker status litigation is set to continue this year, and we wait to see whether worker status (and any reform) is a priority for the new Coalition Government. In the absence of legislative reform, development of our worker status framework will continue to take place before our courts with strong union backing.

There are three notable proceedings currently on foot. We describe these below:

2022 saw the Employment Court deliver its second judgment on the status of Uber drivers in New Zealand [1]. In an outcome that differed from the outcome reached by the Employment Court in respect of a different Uber driver in 2020, [2] the Employment Court declared that the Uber drivers involved the 2022 case were employees. In June 2023, the Court of Appeal granted Uber leave to appeal. That matter is expected to be heard by the Court of Appeal this year. Though the outcome of the case will inevitably be fact-specific, the Court of Appeal’s judgment may contain further guidance on the application of the statutory test.

Last year, the Employment Court also considered a second worker status case concerning the residents of Gloriavale. It found that the female plaintiffs, who undertook cooking, cleaning, washing and food preparation duties, were employees [3]. Leave to appeal has been sought, which could mean another significant judgment this year.

Finally, the Postal Workers Union of Aotearoa has filed proceedings in the Employment Court on behalf of a small group of NZ Post courier drivers, claiming these drivers are employees who have been misclassified as contractors [4]. There is a long history of courier drivers challenging their employment status, and the decision on this matter is likely to have significance for the industry.

The current statutory test to determine whether a worker is an employee, under section 6 of the Employment Relations Act 2000, requires a determination of the “real nature of the relationship” between the parties. Determining the outcome in each case requires an intensely factual assessment of “all relevant matters”.

Testing jurisdictional boundaries

In 2021, the Supreme Court delivered its judgment in FMV v TZB [6]. The Supreme Court confirmed that the Employment Relations Authority’s exclusive jurisdiction to make determinations about “employment relationship problems” is extensive, diverse, and includes employment-related tort claims, which ought to be brought in the employment jurisdiction rather than in the ordinary courts.

Over time, we expect to see issues that have not previously been brought before the employment institutions being litigated in the specialist jurisdiction.

The Supreme Court emphasised the specialist nature of the employment jurisdiction, and the relational approach of the Employment Relations Act 2000, with the key principle of good faith sitting at the heart of that approach.

Mutual obligation of good faith: The heart of the employment relationship

The Supreme Court’s emphasis on the importance of good faith in employment relationships has been echoed in a number of decisions last year from New Zealand's Employment Court.

One judgment emphasised an employer’s statutory consultation obligations when proposing to make a decision that will, or is likely to, have an adverse effect on an employee’s employment and observed these obligations amplified the core duty of good faith [7].  Another provided a reminder that there is a broad discretion under the Employment Relations Act 2000 to impose penalties for breaches of good faith [8].

Looking ahead, we expect to see a continued focus on good faith by the Employment Relations Authority and the Employment Court, especially if other aspects of an employee’s claim are not strong. This will likely occur in conjunction with the increasing emphasis on tikanga in employment relationships (see our further comments in the article “Steady as she goes: Recognition of tikanga Māori by New Zealand Courts” on page 16).

Non-publication orders: A removal of the presumption of open justice?

Over recent years there has been a steady upwards trend in the number of interim and permanent non-publication orders granted by the Employment Court in respect of one or more parties’ identities.

This year we expect a significant judgment from a full bench of four judges of the Employment Court which will examine the legal position on non-publication orders in the employment jurisdiction. The matter was heard in October 2023, and the Employment Court heard submissions from numerous intervenors, including the Privacy Commissioner, the Council of Trade Unions, BusinessNZ, representative bodies from the legal profession, and media organisations. The Court was also assisted by an expert/pūkenga on tikanga. The judgment will provide guidance on whether the current presumption of open justice should remain in place in the specialist employment jurisdiction.

A change in the legal position could result in employment disputes more often being fought behind closed doors. Employers will need to turn their minds to the impact of that on their recruitment processes and on their approach to the resolution of disputes.

Changes under the new Coalition Government

A number of changes to New Zealand's employment laws have recently taken place under the new Coalition Government.

Most notably, the Fair Pay Agreements Act 2022 has been repealed, dismantling the recently introduced bargaining framework before any fair pay agreements were agreed. And, use of the statutory 90-day trial period has been opened up to all employers, regardless of size. This provides all employers with protection from an unjustified dismissal personal grievance if the employee was dismissed within the first 90 days of employment.

When 90-day trial period legislation was introduced in 2016, a significant amount of litigation followed as the ‘rule’ created the only exception to an employee’s ability to bring an unjustified dismissal claim. As the Government has effectively restored the 90-day trial period to its 2016 state, the case law from that earlier time will apply. That law demands that employers adhere strictly to the legislative requirements. An uptick in trial period litigation can be expected, holding employers to those strict procedural requirements, most likely with an additional good faith lens.

Finally, though no parties campaigned on the matter, we expect some movement around changes to the Holidays Act 2003. Once new legislation is passed, we expect litigation will follow as employers and employees work to understand the demands of the new calculations that are expected to be introduced.

References and footnotes

1. E Tū Inc v Rasier Operations BV [2022] NZEmpC 192.
2. Arachchige v Rasier New Zealand Ltd [2020] NZEmpC 230.
3. Pilgrim v Attorney-General [2023] NZEmpC 105.
4. NZ Post courier drivers launch case arguing they are employees
5. Webb v Professional Relief Services Ltd ERA Auckland AA457/10, 22 October 2010; Cameron v PBT Couriers Ltd ERA Christchurch CA143/08, 25 September 2008.
6. FMV v TZB [2021] NZSC 102.
7. Birthing Centre Limited v Matsas [2023] NZEmpC 162.
8.   Pyne v Invacare NZ Limited [2023] NZEmpC 179.