Mr Arachchige was an Uber driver in Auckland, having been a taxi-driver before that.
Uber drivers get their business through an App, which is controlled by Uber. Uber deactivated the App for Mr Arachchige, which meant he got no more business through them. He wanted to bring a personal grievance for unjustifiable dismissal, but for that he needed to be an employee, not an independent contractor.
He applied for a declaration that in New Zealand law he was an employee, and Uber defended it, saying he was a contractor.
The difference between an employee and a contractor depends on the nature of the contractual relationship. It depends on how independently the person works and how much control they have over the way they do their jobs. Taxi-drivers are employees.
The effect of a person being an employee is that the employer has many obligations to the state in respect of them, such as tax, and an employee can bring a personal grievance to the Employment Relations Authority and the Employment Court If they are a contractor, generally the only obligations are between the parties. Companies therefore often prefer people to be contractors. Countries usually have an interest in people being employees, because of the tax, and if they want to regulate relationships between companies and workers.
Uber began its operations in San Francisco in 2010 and is now rolled out across the world. It operates a digital platform which can be operated through an App (a way of accessing a central computer system through a computer or mobile phone) which puts people wanting a lift in touch with people who, for money, will offer one.
Uber stated that the drivers were contractors, who controlled their own work. However some drivers claimed that Uber was a taxi business and they were employed as taxi-drivers, and so entitled to the protections that employees get.
Decisions across the world have been based on an analysis of the control an Uber driver really has over their work.
Uber drivers cannot build their own client base, and they cannot fix their own prices. Countries that have held that Uber drivers are employees include the UK, Switzerland, and France, with decisions coming from unions and state bodies as well as courts and tribunals.
In the US, they were held to be contractors in Pennsylvania and Florida and to be employees in New Jersey.
But Australia and Brazil have held that Uber drivers are contractors.
Mr Arachchige did substantial business as an Uber driver for four years. Then Uber received a passenger complaint and deactivated the App. They did not give Mr Arachchige any details or opportunity to respond. He wanted to claim unjustifiable dismissal but he could not do that if he was a contractor.
Judge Holden discussed the way that an Uber driver uses the App and how it operates to put passengers in touch with drivers and fix the fares. She discussed the Australian case law and a two-year investigation by the Fair Work Commission. The Ombudsman said drivers could control whether, when and for how long they worked, so they were not employees.
She also discussed section 6 of the Employment Relations Act 2000, which defines an employee in New Zealand law. She referred to ride-sharing businesses like Uber being quite new, so there is not much established case law.
Judge Holden placed emphasis on the form of the contract signed by Mr Arachchige. On 17th December 2020 she held that he was not an employee. This puts New Zealand in the same camp as its near neighbour, Australia, but the question about whether Uber drivers are employees or contractors is not yet settled internationally.