Common sense tells us that power in the workplace is not evenly divided. That’s one reason why the ability to bargain collectively is such an important safeguard for workers. It took decades of struggle to get those collective rights recognised, enshrined in law and accepted as being a necessary counterweight to the ability of employers to call the shots.

Not surprisingly, the ways the ACT Party are aiming to redraw the lines between being an employee and being a contractor will set back the clock, and reduce the ability of workers to organise collectively. In all parts of the gig economy, ACT wants to individualise the employment relationship. ACT wants the gig economy to be governed not by general principles of employment law, but mainly via a signed contract between an individual and their boss. What's left unsaid is that the terms of any such “agreement” can readily be presented to jobseekers as a precondition of them getting the job.

Alongside its genuine advantages, the gig economy is also putting some of the ancient victories won by organised labour back in jeopardy. Casualised work has expanded via a number of digital platforms able to directly connect service providers with consumers. No doubt, some workers have welcomed the “flexibility” of contracting, and the escape it provides from the 9-to 5 treadmill.

Many others have had “self-employed” status virtually forced on them. That labelling denies them minimum hourly wage protections and access to sick leave, holiday pay and health and safety provisions. Routinely, not only do such “contractors” have to pay for their own tools (including vehicles, fuel, insurance, tax returns etc) but they have no recourse to personal grievance protections against employers who engage in bullying or sexual harassment. Gig economy couriers and drivers are at particular risk. As “contractors” they bear the full toll of any injuries or damage they experience in the pressure to make deliveries within an earnings framework over which they have little or no control.

All over the world, there has been conflict – and a ton of litigation – over the extent to which the normal workplace rules and protections can, or should, be extended to gig workers. Repeatedly, courts have been willing to look behind the “contractors” label, and assess instead the conditions of the work, and the extent of freedom that is actually in play.

The risk is that if these factors are simply taken at face value, the gig economy will remain the Wild West of employment law. More and more full-time jobs will be casualised and outsourced in a similarly corrosive fashion. Add in the impact of automation, and the survival prospects for full-time, well paid mass employment can seem extremely bleak.

Re-drawing the boundary lines

These concerns form the backdrop for the coalition government’s attempts to re-draw the boundary between contractors and employees, in the wake of the recent courtroorm victory won by four Uber drivers to be recognised as employees.

We’ve been here before, of course. A previous National-led government passed the notorious “Hobbit law” purely to negate a Supreme Court ruling that James Bryson’s conditions of employment in the film industry were those of an employee, not a contractor. That court ruling had entitled Bryson to sick pay, holiday pay etc and access to health and safety protections. Similarly this year, and after another courtroom setback for the business sector (the Uber case) another National-led government is once again legislating to restrict workers’ rights and protections.

Workplace Relations Minister Brooke Van Velden is about to amend the Employment Relations Act to include a “test” that will govern the ability of workers to claim employee status. Four criteria will be brought to bear:

• a written agreement with the worker, specifying they are an independent contractor
• the business does not restrict the worker from working for another business (including competitors)
• the business does not require the worker to be available to work on specific times of day or days, or for a minimum number of hours OR the worker can sub-contract the work
• the business does not terminate the contract if the worker does not accept an additional task or engagement.

If these four criteria are met, then the worker will be a contractor. If one or more of these criteria are not met, then the existing industrial law provisions will apply. Clearly, much weight will be put on that “written agreement.” It is a document prone to abuse. Given the grim realities of job seeking in the current climate, there is nothing to stop an employer from demanding the signing of such a document as a precondition of being considered for the job.

For years, that has been one good reason why modern employment law has developed in the way it has, to ensure that the employer/worker relationship is governed by general principles, and not left to the mercy of individual contracts that are open to manipulation.

As mentioned, some people genuinely want to be contractors. Fine. Yet in other job seeking contexts, such a “written agreement” may have more in common with a forced confession than with a freely negotiated arrangement of mutual benefit.

That being the case, it is deliberately naive to say that such contracts have been entered into “freely” by employee and employer alike, as Business NZ advocacy director Catherine Beard recently claimed on RNZ. As mentioned, Signing up to certain terms, and signing away certain privileges can easily morph into a precondition of getting the job, and ACT makes no acknowledgment of that possibility.

Reportedly, Van Velden talked to Uber before formulating the new rules, but not to the unions that represented the drivers. No real surprise about that, but it is revealing. As happened 30 years ago with the Employment Contracts Act, such “written agreements” can be a mechanism for driving down wages and work conditions.

Footnote One: Late last year, the European Union came to a provisional agreement to improve the working conditions of people working through digital platforms, while still preserving the opportunities and benefits brought by the platform economy. Clearly, the EU is headed in the opposite direction from the approach being taken here by the ACT Party:

Currently, the majority of the EU’s 28 million platform workers, including taxi drivers, domestic workers and food delivery drivers, are formally self-employed. However, many of them have to abide by many of the same rules and restrictions as an employed worker. The European Council said this indicates that these workers are in fact in an employment relationship and should therefore enjoy the labour rights afforded to employees under national and EU law.

The provisional agreement addresses these cases of mis-classification and eases the way for such workers to be reclassified as employees. Under the agreement, workers will be legally presumed to be employees of a digital platform (as opposed to self-employed) if their relationship with the platform fulfils at least two out of five indicators set out in the directive.

The indicators in the EU plan are:

• upper limits on the amount of money workers can receive
• supervision of their performance, including by electronic means
• control over the distribution or allocation of tasks
• control over working conditions and restrictions on choosing working hours
• restrictions on their freedom to organise their work and rules on their appearance or conduct

Tick two out of that list of five, and you’re an employee.

Footnote Two: The United Kingdom. Briefly...after five years of litigation, the UK courts ruled in 2021 that Uber drivers were workers, and not self-employed contractors. As such, the court ruled:

• They will pay at least the National Living Wage for over-25s, regardless of a driver's age, after accepting a trip request and after expenses
• All drivers will be paid holiday time based on 12.07% of their earnings, paid out on a fortnightly basis
• Drivers will automatically be enrolled into a pension plan with contributions from Uber alongside driver contributions, setting drivers up over the long term
• It will continue free insurance in case of sickness or injury as well as parental payments, which have been in place for all drivers since 2018
• All drivers will retain the freedom to choose if, when and where they drive

This victory was undermined somewhat in 2023 by a contrary UK court ruling that drivers for the delivery firm Deliveroo were contractors, mainly based on the fact that they could freely choose to substitute another driver for a particular job. Even then, the UK court was at creative pains to argue that even though the Deliveroo drivers were self-employed contractors, they should not be denied the right to bargain collectively:

This voluntary partnership agreement recognised that Deliveroo riders are self-employed contractors, but gave the GMB rights to bargain collectively on pay and to be consulted on benefits and other issues, including riders’ safety. This innovative approach shows that, even if a workforce is predominantly self-employed, there is no reason why they cannot seek to agree recognition and collective bargaining arrangements.

In New Zealand it would be useful if the ACT Party took similar steps to ensure that those who self-identify as contractors would still be able to bargain collectively over pay and conditions. Fat chance of that.

Overall....UK tribunals and courts have seemed to be sceptical of the “self-employment” models set up by the gig platforms. “Increasingly [they] are looking at the relative bargaining power of the parties involved in these arrangements and the reality of direct/indirect control over how work is performed by gig workers, rather than at the labels applied in contracts,” Osborne Clarke [labour relations specialist] Kevin Barrow has said. Here, Brooke Van Velden seems more than happy to take those labels at face value.

Footnote Three: At first glance, the situation in Australia looks more clear cut. Workers in the gig economy are not employees, according to rulings by the Fair Work Commission. Yet the case law has sometimes arrived at contradictory decisions, even when applying the same reasoning. Late last month, an attempt was launched to revisit this issue with the Fair Work Commission, on behalf of food delivery riders and parcel couriers.

Footnote Four: Spain has been the most forthright country in Europe in treating gig economy workers as employees, unless proven otherwise. In 2021, Spain passed its so-called Riders Law: 

Spain [has][ approved a pioneering law that gives delivery platforms a mid-August deadline to hire workers currently freelancing for them. and that requires transparency of artificial intelligence used to manage workforces.

The royal decree passed by the center-left ruling coalition immediately affects some 30,000 couriers. It comes in the wake of a ruling by Spain’s top court...and at a time when other countries in Europe and elsewhere are deciding on a labour model for the so-called gig economy, which is often blamed for precarious jobs and low salaries.

While most firms complied with the Riders Law some of the big players – eg. Uber Eats and the delivery app Glovo – have largely flouted it. Uber fired thousands of its couriers just prior to the government deadline. Subsequently, it only reluctantly gave those fired workers severance pay, and then only after being challenged by labour unions. Glovo has since treated the fines it has regularly incurred for its non-compliance as being simply a bearable cost of doing business.

One interesting aspect of the Riders Law was that it treated the Uber app not simply as an intermediary between its drivers and their customers, but as a transportation firm in its own right, and therefore subject to regulation.

Footnote Five: Finally, given ACT’s one-sided approach to the issue, it is worth keeping in mind what is at risk. Patrick Benaroche is co-chair of the Employment and Industrial Relations Law Committee of the International Bar Association, and his work on that committee has taken him to the heart of the employee vs contractor disputes. He’s aware of the stakes:

‘If a person is classified as an independent contractor, there are no minimum wages to offer, no social benefits that apply, no minimum hours of work, the requirements of minimum standards legislation do not apply to such workers. In the event of a dismissal, recourses available to employees are not open to independent contractors and the entire framework of health and safety laws designed to protect workers generally do not apply.’

Exactly. But in its usual one-eyed focus on what will deliver employers more revenue at reduced cost, the coalition government is doing nothing to protect the gig economy workers from potential exploitation. In New Zealand, the precariat is being set up to expand.

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