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Using ridesharing businesses as a means of transport is growing in popularity in New Zealand, particularly in major urban hubs like Auckland and Wellington. Recent law clarifications mean more regulation in the industry, which means you can offer a safer experience for your customers in line with the law. The ridesharing market is still relatively new in New Zealand, so it may be worthwhile to consider whether starting such a business is an option for you. First, however, you need to ensure you meet the legal requirements that come with the practice. Therefore, this article will go through four things to consider before starting a ridesharing business.

Planning for Your Market

Firstly, you need to determine whether there is a demand for a ridesharing business in the location you want to have your business. You will also need to compare which locations are the most profitable for your business.

For example, major urban centres will have more demand but more competitors, such as Uber or Ola. On the other hand, smaller towns may not have the added competition, but there may not be much demand for your services.

You will also need to develop an appropriate method of contact for your business. For example, most businesses use a rideshare app as a way for customers to find and order rides. You will need to develop the necessary software and networks to facilitate this process. It may also be good to have an alternative contact method, such as a local phone number.

Transport Licensing Regulation

You should also be aware of what laws apply to both your business and your drivers. In particular, you need to ensure you comply with the licensing requirements of New Zealand transport law. To carry passengers for hire or reward, you need to:

  • obtain a small passenger service licence for your rideshare company; and
  • ensure that all of your drivers have a passenger (P) endorsement for their licences.

To obtain a passenger endorsement, there are various requirements your drivers need to meet. On behalf of the Waka Kotahi New Zealand Transport Agency (NZTA), the police will vet your drivers to confirm they are safe to take passengers, looking at past criminal history and similar. Drivers also need to:

  • keep logbooks of their paid work;
  • comply with work time requirements; and
  • have a current warrant of fitness for their vehicle.

Before you start your ridesharing business, you need to vet your drivers and ensure they have the proper certification.

Privacy Regulation

If passengers book rides through an app, then you will be collecting and using their personal information, including:

  • names;
  • location data;
  • credit or debit card details; and
  • phone numbers.

When you deal with any information of this nature, you need to comply with New Zealand privacy law. You should have an easily accessible privacy policy or similar document outlining:

  • what personal information you collect, and why;
  • whether customers can choose not to give you their personal information;
  • what effect refusing to give you personal information will have;
  • who has access to customers’ personal information;
  • whether any laws apply to your information collection;
  • that customers can request access to their personal information; and
  • your contact details.

You need to adequately secure the personal information you store, especially any financial details. Only use necessary information that is up to date and accurate. Do not keep personal information for longer than you need it.

For example, if a customer deletes their account on your app, you cannot keep their personal information without good reason.

Driver Status

Before you start finding drivers for your business, seek legal help for drafting their contracts with your business. Drivers that work for ridesharing businesses are either independent contractors or employees. Therefore, the duties your business owes them changes depending on that status. In addition, contractors do not receive the same entitlements that employees do, such as sick leave or the ability to bring a personal grievance claim against your company.

If something goes wrong, the status of your drivers will significantly impact what legal options they have available against your company. Whether your drivers are employees or contractors may not solely rely on the nature of your contract either. It depends on the factual context of the relationship and how much autonomy your drivers have in determining their own work hours and jobs.

Therefore, you need to clearly decide what kind of working relationship you have with your drivers and should seek experienced help to guide you in that process.

Key Takeaways

Ridesharing in New Zealand is still relatively new, and only recently has the market expanded to support more businesses of this kind. If you are considering starting a ridesharing business, be sure to consider the various legal requirements that your company and your drivers need to meet. If you would like more information or help with starting your ridesharing business, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is the difference between a contractor and an employee?

A contractor is an independent person your business can pay to complete work, that manages their own taxes and does not get employment benefits. Instead, you hire employees with a binding employment agreement.

What is a passenger (P) endorsement?

A passenger endorsement is a certification you can get attached to your licence that means you can carry passengers for hire or reward. Your drivers need this certification if they want to work as a rideshare service provider.

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