Their victory could be hollow though, as the Employment Court has ruled directors of the now defunct company are not personally liable for almost $80,000 owed to the drivers in arrears, Holidays Act payments and other entitlements.
In an Employment Court decision released last week, Judge Bruce Corkhill agreed with earlier Employment Relations Authority findings that George Kennedy, Toni Powell, Gary Powell and Brian Carnahan were employees of the firm.
"The parties did not have a common understanding as to the legal effect of their arrangements," Judge Corkhill said.
"In practice, the drivers were subject to significant control, they carried modest risk and they were part and parcel of STL’s business operation ... balancing all relevant factors, I am well satisfied that the real nature of the relationship between STL and the commission drivers was that of employer and employee."
Industry practice in Dunedin, where few taxi drivers are employees, was not a useful indicator of the driver’s status in this case, he said.
"Significantly, none of the affected drivers understood that the use of the commission model by other companies meant they were independent contractors when working for STL."
The drivers’ working arrangements for STL were more proscribed than those for contractors. They were an integral part of the company.
"It is clear these drivers were not in business on their own account.
They did not own their own vehicles or pay any of the not insubstantial running costs involved, including maintenance; nor could they obtain a return by subcontracting."
He found STL’s directors, Maureen and Ronald Grant, had always honestly believed the drivers were not employees.
"The beliefs as to status held by Mr and Mrs Grant were on the face of it naive, particularly in light of the fact they deducted PAYE. However, such an understanding was consistent with the fact that lawyers had drafted a contract for taxi driving services in 2007, which made it clear commission drivers were not retained under a contract of services ... the document stated that the principal was accordingly not obliged to grant holidays, sick leave, or other benefits under the Holidays Act."
For directors to be in breach under the Employment Relations Act deliberate intent had to be demonstrated, and Judge Corkhill was not satisfied the Labour Department had made out the Grants knew the drivers were employees. That meant proof of intention or purposeful action to breach the law was also not made out.
The drivers were collectively awarded just over $79,000, to be paid by STL — Mr Kennedy $13,165.92; Mr Carnahan $20,367.21; Mrs Powell $32,745.10 and Mr Powell $13,589.55 — but with STL no longer operating, the chance of being paid those arrears seemed slim.
Mrs Powell said the drivers were still considering what they would do next, but were pleased the court had ruled they were employees.
