Impact of the Uber Decision on Real Estate Agents and Business Brokers

The recent Court of Appeal ruling that classified four Uber drivers as employees rather than independent contractors could impact sectors like real estate and business brokerage. Professionals in these fields, often working under similar gig economy models, may see changes in their employment status, potentially gaining employee benefits like minimum wage and holiday pay. It's important for agents and brokers to stay updated on legislative changes that could alter the nature of their contractual relationships.    

 Background

1. On the 2022 four Uber drivers took a case to the Employment Court under section 6 of the Employment Relations Act 2000 (“ERA”). To argue that they were employees of Uber not independent contractors; and as such were entitled under New Zealand law to the benefits and protections of being an employee, such as a minimum wage and holiday pay.

2. The Employment Court found that they were employees, and Uber appealed to the Court of Appeal (“COA”). The judgement of the COA agreed with the Employment Court that the four drivers were employees. Uber has stated that they will be seeking leave to appeal the decision to the Supreme Court; An application has yet to be filed.

3. As a result of the Uber decision questions are being raised as to the wider impact of the decision on the gig economy and contracting. There are also proposed legislative changes that could change the employment/contracting landscape in the near future.

   Real Estate Agents and Business Brokers

   1. Specifically, the impact of this decision on Real estate agents and business brokers is unique due to the interaction between the Employment Relations Act 2000 and the Real Estate Agents Act 2008 (“REAA”).

   2. Section 6 of the ERA requires the courts to give consideration to the real nature of the relationship between the parties and not take any statement describing the relationship as determinative. However, section 6 also states that such analysis does not “limit or affect” the Real Estate Agents Act 2008.

   3. This is highly important for the independent contractor contracts that real estate agencies and business brokerages have with their respective salespeople.

   4. The REAA gives effect to the relationship between the agencies and brokerages and their respective sales people through section 51 of the Act. This section provides that a contract for a salesperson is,

   “….conclusive so far as it expressly states that the relationship between the agent and salesperson is that of employer and independent contractor.”

   1. The Employment Court has been asked on two occasions to make determinations considering the interaction between the ERA and the REAA: Pollett v Browns Real Estate Ltd [2011] NZEmpC 116 and Megan Jaffe Real Estate Ltd v Kelland [2018] NZEmpC 28.

   2. In both cases the Employment Court treated the wording of the REAA as determinative as to the employment status of the salespersons, and both were found to be contractors as their contracts stated.

   3. In our view it does not appear that the Uber decision will impact on the independent contractor contracts that real estate agencies and business brokerages have with their salespersons, as an enquiry like the one conducted by the courts in Uber, is not applicable to the contracts under the REAA. The REAA is determinative as to the relationship between the parties.

   Proposed Legislative Changes:

   1. Another factor to be aware of in the legal landscape is that the new coalition government in their Q3 action plan have proposed changes to the Employment Relations Act.

   2. These changes exclude independent contractors from the definition of employee. When contractors who have signed explicit contracts stating they are a contractor they will not be able to challenge their employment status in the employment court.

   3. Such independent contractor contracts would have to meet minimum standards that are designed to protect a worker’s freedom to contract: Such as clear language that they are a contractor, being given sufficient material and time to seek advice before entering into the contract, limits on restrictions from performing work for other business and the business being unable to terminate for not accepting a specific task.

   4. It is not clear at this stage what impact this would have on the Real Estate Agents Authority Act 2008 and the determinative nature of section 51. Along with the content of salesperson independent contractor contracts and if this would need to be amended in light of any legislative changes.

   
   

   If you have any queries in relation to your contracts, please reach out to us. We will continue to update you as the legal landscape changes in relation to the Uber decision and proposed legislative changes.