Supreme Court dismisses Pizza Hut franchisees' appeal in delivery drivers case

The Supreme Court dismissed an appeal by two Pizza Hut franchisees today. Photo / 123rf

The Supreme Court has unanimously dismissed an appeal by two Pizza Hut franchisees after labour inspectors successfully argued delivery drivers are employees, not independent contractors.

In 2018, a Labour Inspector of the Ministry of Business, Innovation and Employment launched proceeding under the Employment Relations Act 2000 in the Employment Relations Authority (ERA).

The action - brought on behalf of 28 pizza delivery drivers - was to recover wages said to be owing by the two franchisees, Gill Pizza Ltd and Malotia Ltd, under the Minimum Wage Act 1983 and the Holidays Act 2003.

Both companies maintained the delivery drivers were not employees but contractors and therefore were not covered by either legislation.

The ERA found it lacked jurisdiction and the issue needed to be resolved by the Employment Court, which dismissed the labour inspector's challenge, before it was overturned by the Court of Appeal - finding in favour of the inspector.

Last month, the Supreme Court heard an appeal by Gill Pizza and Malotia about whether the Court of Appeal was correct to conclude the Employment Court erred in finding. The appeal hinged on if a defendant asserts there is no employment relationship, the labour inspector must first seek a declaration of employment status from the Employment Court before commencing or continuing with a proceeding under the Employment Relations Act.

The issue arose because the legislation empowers a labour inspector to commence an action on behalf of an "employee" to recover wages or holiday pay entitlements.

The Supreme Court dismissed the appeal and agreed with the interpretation of the relevant statutory provisions adopted by the Court of Appeal.

The court did not consider that the existence of a dispute regarding whether the person on whose behalf the labour inspector is pursuing an action is an employee can be controlling of the jurisdiction either of the labour inspector to commence the action or of the ERA to deal with it.

Rather, the court held that the question of whether a person on whose behalf a claim
is brought is an employee is a jurisdictional fact which the ERA can determine during the course of dealing with the claim.