Gig Economy on Notice with Supreme Court Ruling

Gig Economy on Notice with Supreme Court Ruling

The landmark Supreme Court ruling in Raiser Operations BV v E Tu Incorporated has upended assumptions about what it means to be an independent contractor in the gig economy, confirming that four Uber drivers are in fact employees. The decision casts doubt on contractor-based business models across a range of industries and raises urgent questions about worker rights, compliance, and the future shape of platform work.

Employee v contractor test

The Supreme Court found that employee status should normally be addressed by applying the traditional common law tests. Those include the control, integration, and fundamental tests in place to establish the real nature of the parties’ relationship, as is required by section 6 of the Employment Relations Act in determining whether or not a worker is an employee. The Supreme Court also recognised that, at the time of entering the relationship, the parties’ common intentions as to the status of their relationship remains part of the common law. If the parties genuinely intended their relationship to not be one of employer and employee, that should at least be accorded some weight.

The Supreme Court considered that Uber’s intention at the time of entering the agreements with the drivers was clearly that they are not employees. The Supreme Court noted that the Uber drivers are obliged to fit their commitments to Uber around other commitments, including engagement in other part-time employment. Nonetheless, the common law tests as established in Bryson v Three Foot Six persuaded the Supreme Court that the drivers should be classified as employees.

The Supreme Court found:

• Uber exercises very close control over the workers, including the price, terms of service for drivers and passengers, the complaints and refund system, and the ratings system. Additional incentives and rewards systems also amount to a level of control.
• There are strong indicators that drivers are integrated into Uber’s business, even if not in the traditional sense of wearing uniforms or working on-site. Further, drivers cannot build their own customer base because users interact only with Uber through the platform. This supported the Supreme Court’s conclusion - consistent with the Employment Court and Court of Appeal- that the relationship between Uber and its drivers is one of co-dependence.

On the flip side, the Supreme Court considered there were some indications that the drivers are in business on their own account, including that they own and manage their vehicles, and choose when, where and how long to work. However, these factors were overridden by the extent of the drivers’ integration into Uber’s business, together with the drivers’ lack of control over the quantity and quality of the work they receive, the price paid for it and their inability to develop their businesses through contact with users.

Gig economy

This decision may well open the way for other workers in the “gig economy”- including food delivery drivers, tradespeople, and freelance artists - to claim employee status and benefits like minimum wage and leave entitlements. The Supreme Court’s decision has no doubt cast doubt on the status of contracting arrangements, particularly for those businesses founded on a contractor model.

Workplace Relations and Safety Minister Brooke Van Velden has sought to clarify this with the introduction of the Employment Relations Amendment Bill in June 2025 (the Bill). The Bill aims to create more certainty about the type of work being done from the beginning of an agreed contracting arrangement through a new gateway test for defining independent contractors.

The new gateway test establishes five criteria for determining whether a worker is a “specified contractor,” and therefore not entitled to minimum employment benefits:

1. A written agreement that specifies that Person A is an independent contractor.
2. Person A is not restricted from performing work for any other person, except while performing work for Person.
3. Person A is not required to perform, or be available to perform, work for person B at a specified time or on a specified day or for a minimum period or Person A is allowed to sub-contract the work for Person B to another person.
4. The arrangement does not terminate if Person A declines any work offered to them by Person B that is additional to the work agreed upon in original agreement.
5. Person A had a reasonable opportunity to seek independent legal advice before entering into the agreement.

Despite the Bill’s aspirations, until it is passed into legislation or there is otherwise further clarity from Parliament surrounding a test for employee status, the Supreme Court’s landmark decision remains the authority as to how independent contractors are defined. Employers and workers alike will need to take caution when entering into working arrangements to make sure they understand the nature of the relationship.

Employers should also review their existing agreements to ensure they will not be subject to a retrospective claim for employment status from those workers currently in an independent contractor role.

If you would like further clarity around the nature of your working relationship following the Supreme Court’s decision in Raiser Operations BV v E Tu Incorporated, feel free to get in touch with our Employment team – we are happy to assist.