When the Wheels fall off: Uber drivers ruled employees in landmark case

The gig economy just got a reality check - and your contractor arrangements might need one too.

The Supreme Court has handed down one of the most significant employment decisions Aotearoa has seen in years, and it doesn’t just affect Uber. It has major implications for any business relying on contractors, gig workers, or “flexible” labour models.

After a three-year legal battle, four Uber drivers have finally been declared employees, not independent contractors. Uber lost in the Employment Court, then the Court of Appeal, and now the Supreme Court - unanimously.

The country’s highest court was blunt: whatever the contracts said, the reality of the relationship was that Uber was running the business, and the drivers were working in it.

Why the court said the drivers were employees:

The Supreme Court looked at what actually happens day to day - not the labels Uber used in its contracts.

A few points stood out:

• Drivers had no real say in how trips were set up or priced.

• Uber controlled the customer experience, the fares, the ratings, and how disputes were resolved.

• Riders don’t negotiate with drivers - they contract with Uber’s system.

• The drivers couldn’t build a business of their own - no ability to set rates, build clientele, or develop goodwill.

In short: Uber was running the show, and the drivers were essential to their core business.

The Court called it what it was - an employment relationship.

What this means for Employers...

This case lands at the same time Parliament is wrestling with the highly-debated Employment Relations Amendment Bill, including a proposed “gateway test” for determining contractor vs employee status.

Even though the government says the Bill is designed to create “certainty and flexibility,” the Supreme Court has signalled something important:

You can’t contract out of reality.

If a worker looks and operates like an employee, even if their contract says otherwise, the law will treat them as one.

Uber argued that drivers worked whenever they liked, could use competing platforms, and weren’t integrated into Uber’s business.

The Court disagreed.

• Choice of when to work wasn’t enough to make them contractors.

• Working for other platforms doesn’t automatically make someone “in business.”

• Integration isn’t just about uniforms and offices; it’s about whether your service depends on them.

The drivers were the face of Uber’s business. Without them, Uber has no service.

Interestingly, the Supreme Court pointed out that vulnerability alone doesn’t expand who counts as an employee under the law. But vulnerability can explain why the contract doesn’t match the reality.

In other words the courts won’t protect every gig worker - but they will look past clever contract wording.

Why this matters for your business

This decision doesn’t only apply to global tech platforms. It affects:

• Trades and construction using “independent” labour

• Recruitment and labour-hire models

• Hospitality and retail using regular temps

• Transport, delivery, and ride-on-demand services

• Professional services using contractors long-term

• ANY business relying on “contractor flexibility”

If you direct the work, set the rates, control the brand experience, decide how it’s delivered, or rely on that person for your core service, you may have an employee - not a contractor.

That comes with big responsibilities: leave, holidays, PAYE, minimum wage, personal grievances, good faith obligations, the lot.

What Employers should do now

This ruling is a wake-up call.

Now is the time to:

• Review all contractor arrangements against the real nature of the relationship

• Reassess whether any contractors look more like employees

• Consider the risks: backpay, arrears, penalties, and personal grievances

• Stay alert for the outcomes of the gateway test and law changes

• Seek advice early — before issues arise

If your business uses contractors, gig workers, freelancers, or “as-needed” labour, now is the moment to double-check that your model is still safe.

This case is going to ripple across industries. If you’re unsure how it affects you, or you want an expert review before problems arise, reach out at suppoty@yellowconsulting.co.nz. We help NZ employers stay ahead of changes, protect their business, and make sure their people practices are fair, compliant, and future-proof.

Disclaimer This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.