Supreme Court Finds Uber Drivers Are Employees

The Court's five-judge unanimous decision (albeit not for the same reasons) was handed down in Rasier Operations BV & Ors v. E Tū Incorporated & Anor [2025] NZSC 162 (17 November 2025). It upholds the earlier verdicts in favour of the drivers in the Court of Appeal (seeCourt of Appeal Confirms Uber Drivers Are Employees (30 August 2024)) and the Employment Court (seeEmployment Court Rules Uber Drivers Are Employees (4 November 2022)), which set out the background to the case.

In summary, the Supreme Court's decision found that:

• there is no pre-trip contact between riders and drivers. Instead, Uber offers a rider the fare for the trip and the rider accepts that offer. Neither drivers nor riders can effectively select one another, and they are practically anonymous vis-à-vis one another throughout the entire transaction. Uber earns its revenues by charging riders for trips and resolves any difficulties that might arise during each trip. A passenger could not reasonably be expected to think they were contracting with the driver when they got into the car;
• two of the judges determined that no weight needed to be given to terms in Uber's "take it or leave it" contracts, which disguised the reality of the parties' relationship;
• the Court agreed with the Court of Appeal that inequality of bargaining power may not enlarge the meaning of "employee". To that extent the Employment Court had erred. However, inequality of bargaining power may explain why a contract does not reflect the real nature of the relationship;
• three judges found that the Court of Appeal did not misinterpret the meaning of "employee" in section 6 of the ERA, nor the Supreme Court's earlier decision in Bryson v Three Foot Six Ltd [2005] NZSC 24. They agreed with the lower courts that:
  • Uber exercises very close control over every aspect of drivers' delivery of its passenger transport services.
  • drivers are not closely integrated into Uber's business in the traditional sense that they must attend its premises, wear uniforms and submit to human resources supervision, but once it is accepted that Uber delivers passenger transport services to riders, drivers must be considered integrated in a more substantive sense. They are the face of Uber's business, and the relationship between Uber and its drivers is one of co-dependency; and
  • there are some indications that drivers are in business on their own account but their lack of control over the quantity and quality of work they receive, the price they are paid for it and their inability to build goodwill point strongly to the conclusion that they are not;
• the other two judges considered that both Courts had erred in law; in particular, the Court of Appeal was wrong to effectively discount the parties' common intention, to divide the inquiry into two stages and to examine only the relationship at times when drivers were on the Driver app. Nevertheless, by ascertaining the real nature of the relationship using common law tests, they determined that the drivers were employees because the factors pointing away from employee status (including intention, the drivers' ability to choose their hours of work and to work for others, and vehicle ownership) were outweighed by those pointing towards it (including integration, control and the lack of realistic ability for the drivers to develop their own Uber businesses).

The predominant tax implications of the judgment are that:

• Uber must deduct PAYE tax at source from payments for services provided by its drivers;
• the drivers cannot claim income tax deductions for business expenses;
• the drivers cannot register for goods and services tax in respect of their transportation services for Uber; and
• the accident compensation levy and KiwiSaver contribution obligations of Uber and the drivers change.

The Supreme Court decision exhausts Uber's rights of appeal. However, the government intends to introduce an Employment Relations Act Amendment Bill into Parliament to clarify the status of independent contractors from the start of their contracting arrangement (seeGovernment to Amend Employment Law to Overcome Uber Court Ruling (16 September 2024)).

Report from our correspondent Dr Kevin Holmes. Follow our reporting on this via our daily Tax News Service (subscribers only).