Courier drivers have long been categorised by the Courts as contractors and not employees, largely due to industry practice. The Employment Court recently reconsidered how owner drivers in the courier sector were to be classified in the case of Leota v Parcel Express Limited. Mr Leota was a driver who provided courier services to Parcel Express Limited under an agreement which identified the arrangement as a contract for services. Although the Court said the decision related to the specific facts of Mr Leota’s relationship with Parcel Express Limited, the decision to declare him an employee may set precedent for other owner drivers, especially those operating under a similar model and contract to that used by Parcel Express.

MR LEOTA’S CASE

Mr Leota began providing courier services for Parcel Express in 2018, receiving a guaranteed $240 per day for completing a delivery run specific to his contract. Prior to starting he was told by the company he would need to buy his own van (at his own expense), which would need to have Parcel Express signwriting. Mr Leota arranged a second-hand van from a third party and Parcel Express loaned him much of the money for the purchase, deducting it from his pay over regular intervals. He signed an agreement which declared his status to be that of a contractor. 
 
The contract itself had many of the facets of an employment agreement. It gave Parcel Express a large degree of control over Mr Leota: 

• There were restrictions on the colour, size and type of van he could drive;

• The boundaries of his daily run (Panmure) were set and could not be changed;

• He had to wear a company uniform;

• He had to comply with the company manual and any directions from any Parcel Express manager;

• He could not take any more than 20 days’ holiday during any 12-month period; and

• He had a restraint of trade clause limiting his activities post-termination. 

Parcel Express ended up expressing concerns over Mr Leota’s conduct which brought their arrangement to a close. Mr Leota then sought a declaration from the Court that his correct legal status was that of an employee. That would give him access to a suite of rights, including the ability to raise a personal grievance in respect of the way his arrangement with Parcel Express had been ended.

THE COURT'S DECISION

The Court decided Mr Leota was an employee. It said the contractor status the parties used in their agreement was not determinative of the real nature of the relationship. The Court also decided that, while industry practice was relevant, there was a limit to how useful this test could be as it could lead to the “tail wagging the dog”.