Two Aramex courier drivers say they were sold a false promise about self-employment and business growth, and are suing for a declaration that they are employees.
“Enjoy the freedom of working for yourself,” said the blurb about becoming a courier franchisee with United Arab Emirates-based company Aramex. “No experience required.”
But for Ahenata Rameka and Puawai Tito, two Taupō women who bought into the dream of self-employment with Aramex 18 months ago, the promise of independence and opportunity has turned out to be a fiction. The Aramex literature spoke of business growth, capital gain and flexibility, but the reality is huge hours, exhaustion, poverty incomes, and tight compliance with company rules.
They say they are not genuinely self-employed, have no influence over their “businesses”, and are trapped.
The two friends, who bought their respective Aramex courier franchises in April 2021, have filed claims in the Employment Relations Authority seeking declarations that they are employees under section 6 of the Employment Relations Act. If their claims are successful they will be entitled to the full suite of employment protections, including the minimum wage, holidays, sick leave, Kiwisaver contributions, and legal recourse for unfair dismissal.
Their lawsuit is against C.T. and M.A. Papuni Transport, the Aramex regional franchisee that controls the Taupō, Rotorua and Whakatāne area. Owned by Charlie and Maylene Papuni, the Rotorua company bought the regional franchise in late 2020; their business is in turn under the ambit of Aramex’s national master franchisee.
Rameka was a kohanga reo worker when she saw a Facebook ad for an Aramex run in Taupō. “It said, ‘be your own boss’ and ‘work your own hours’,” she told Newsroom. Her accountant and lawyer looked over the details of the business, and neither raised any concerns. She then paid $30,000 for the previous franchisee’s delivery van and for the exclusive franchise to operate as an Aramex driver within a defined Taupō territory. She had to buy and wear the Aramex uniform, rent an Aramex scanner (deducted from her earnings at $120 a month), and start work every morning by 5.30.
Not only did the van soon break down and she had to buy another, but it became immediately clear that the job couldn’t be done in anything less than 12 hours a day. Six months in, she was asking herself: “What the hell have I got myself into?”
She says she’s reliant on the unpaid help of family members – who put in 25 to 30 hours a week to support her – to get through the deliveries and pickups that fall within her territory.
Puawai Tito left a job as a forklift driver at the Tenon Clearwood mill, where she’d been for seven years, to buy her run. She paid $19,000 and took over the previous franchisee’s repayments on a $58,000 delivery van. As with Rameka, there were no apparent red flags in the financial and contractual documents.
For the first eight months she worked from 5.30am – and sometimes as early as 4am – until 9 at night to get through the deliveries and pick-ups on her run, which is bigger than Rameka’s and includes much of the Taupō urban area.
Several months after she started, she was told that she had to do two new parcel pick-ups a day, from Briscoes and Rebel Sports, at specified times. The contract had been negotiated by Aramex, and she had no choice but to perform the additional work – under the rules of the franchise agreement, she’s not permitted to refuse work assigned to her. The new pick-up obligations also meant she had to work six days a week, and seven days whenever there’s a Briscoes sale or a public holiday weekend when the volume of consumer sales peaks.
She says it takes 80 to 90 hours to get through the work on her run. After initially struggling on her own, she also had to call on relatives to help, but her “business” doesn’t generate enough income to pay them.
Below minimum wage
Analysis of Rameka’s accounts by driver advocate Pete Gallagher shows that her income after costs, and taking into account the number of hours she works (but not the unpaid time put in by family members), comes to $15.64 an hour on average. Tito says her earnings are similarly well below minimum wage level.
Neither of the women have the ability to negotiate rates with customers – these are all set by Aramex. Although they are entitled to a 15 percent commission on parcel pick-ups, they don’t get paid until the client pays the regional franchisee.
Nor does their income line up with the amount of work they do. Under Aramex’s structure, 80 percent of client payments go to the company, and 20 percent is pooled among the courier franchisees within a particular territory. In the case of the Taupō, Rotorua and Whakatāne region – the area under the Papuni’s control as regional franchisees – there are eight drivers. Although Tito and Rameka have the two biggest runs in the region, the income in the pool is divided among all eight.
As franchisees they are required to comply with Aramex’s operations manual, although neither received this document until around six months after they bought their runs. The terms of the manual can be altered by Aramex at any time. They are permitted to drive only for Aramex – not that either would have time to contract their services to other clients.
Tito has twice fallen asleep at the wheel while completing her daily run. Both have young children – Tito has two and Rameka four – who they say are suffering as a result of their mothers’ exhaustion and long hours.
“I don’t see them before or after school. I miss their sports training, their homework. Before this I was there for all of that, and now my mum and brother do that. I hate it, having to ask for that help,” says Rameka. Tito’s son is a talented basketballer who trialled for the New Zealand under-15 team, but she hasn’t been able to get to his games because of her long hours.
Both say they feel unable to sell their runs because they are unwilling to fudge the truth about what’s involved. “I would never want to sell this to anyone because I’d be lying to them,” says Rameka. “I’d feel so guilty.”
If they walked away from their Aramex runs, they’d still own their vans but would lose their investment in their franchises. Their run could then be put back on the market by the regional franchisee – something that Gallagher has seen happen in other Aramex regions.
Maylene Papuni declined to be interviewed about the women’s claims to the Employment Relations Authority, and hung up before hearing any questions. Aramex New Zealand CEO Mark Little said in an email response to Newsoom that: “This is not a legal issue, rather a dispute between the courier franchisee who bought the business and the courier franchisee who sold.” However, Rameka and Tito’s applications to the ERA clearly cite the Papunis as respondents in a claim for a declaration of employment status.
“[F]ranchisees are independent businesses and are provided with clear statements around what would be considered standard requirements of owning a franchise business,” said Little. “They are remunerated based on their pick-ups, deliveries and commissions and have ownership over how many hours they wish to work each week…They are also in a position to grow and then split their territory, leaving them with a smaller territory to manage.”
However, section 6 of the Employment Relations Act requires judicial bodies to look past the black letter of the contract and assess the substantive nature of the relationship, including the extent to which the contractor is under the control of, and integrated into, the “client” business.
Gallgher, who has helped Rameka and Tito assemble their legal claims, says their situations are not unusual. “I’ve talked to 30 to 40 Aramex franchisees around the North Island, and I’ve yet to come across a single one who is earning above the minimum wage.”
Gallagher leads advocacy group ProDrive, which last year analysed the accounts of 11 North Shore Aramex drivers and found they were making on average $12.78 after costs and before tax, with some as low as $10 an hour. Aramex’s then-CEO Scott Jenyns (who resigned early this year) disputed Gallagher’s numbers, saying drivers were earning between $20 and $22.66 an hour after expenses. Following publicity about Gallagher’s research, Aramex brought in a $600 a week subsidy for Auckland drivers.
Nor are Rameka and Tito the first to report dangerous levels of exhaustion. Earlier this year former Aramex franchisee Brian Cossey described near-misses on the road and reaching the brink of suicide as a result of working up to 16 hours a day, six or seven days a week for an income of $11.72 to $12.68 an hour after costs. He sought help from his regional franchisee, who was “dismissive”, he told Safeguard magazine. Eventually his doctor declared him unfit to work, and he walked away from his run.
Aramex was formerly known as Fastway Couriers, founded in 1983 by Napier man Bill McGowan, who developed the multi-level franchise structure. It was puchased by UAE-based Aramex Global in 2016. Throughout the country it has 18 regional franchisees and around 280 individual courier franchisees. Last year Aramex New Zealand Holdings generated revenue of $79 million and net profit of $4.7 million, according to Companies Office filings.
Vulnerable contractors
Whether courier drivers are genuinely self-employed has long been the subject of legal contest. The most recent significant legal ruling was in the case of Auckland man Mika Leota, who the Employment Court found in 2020 to be an employee of, and not a contractor to, Parcel Express. Leota was told what to do and when to do it, and “had no business of his own; he was solely in the business of Parcel Express”, the court concluded.
Broken promises of business growth and independence appear to be widespread in the industry, judging by a survey by the Ministry for Business Innovation and Employment in 2020. Respondents said they had been “‘sold a dream’ about what courier contracting would be like…They believe they are starting from the bottom to work their way up, but we [the surveyors] heard there is usually not much capacity to grow and progress,” MBIE wrote in a summary of public consultation.
Eighty-four percent of courier drivers who responded worked more than 45 hours a week, but 51 percent didn’t make enough to meet everyday needs. The majority believed they were actually employees, not contractors, but had not legally challenged their status.
Earlier this year workplace relations and safety minister Michael Wood received a report from a tripartite working group established to investigate the plight of vulnerable contractors, which recommended a range of reforms to provide better protections. It called for a rewrite of the legal definition of ‘employee’ in the Employment Relations Act, to create a “brighter line” between someone who is clearly working in the interests of an employer, and a person who is genuinely running an independent enterprise and is free to contract to whomever they like, organise their own affairs, and generate gains that accrue to their own firm.
It also suggested that court decisions on employment status relating to individual workers should extend to other workers doing similar work for the same entity. At present, if workers like Rameka and Tito succeed in their claim, there is no immediate flow-on to other drivers because each case is decided on its specific facts.
The tripartite group also floated the possibility of allowing groups of workers to seek court rulings on their employment status, and allowing regulators to rule on employment status without waiting for workers to file legal action.
Wood is expected to release proposals on these issues for public consultation later this year.
But Rameka and Tito are not waiting for the slow wheels of policy reform to turn. The first step in their case to the Employment Relations Authority is mediation; if there is no resolution the next step will be a substantive hearing. “I’ve got nothing to lose,” says Rameka.
