Should you jump into the car pool?

This article appeared in the April/May edition of the FTD (Supply Chain Management) Magazine


Carpooling is when two or more people travel in a single vehicle to a similar destination and share the costs of the trip. The concept of carpooling is nothing new, however with technology fast reshaping the way that commuters are able to connect with one another it is enjoying a renaissance.

The idea is simple, but effective. By replacing the workplace bulletin board with a smart phone app, those wanting to join forces with other commuters in their area are no longer limited to friends, family and colleagues when it comes to quickly and easily finding a carpool.

In an evolving share economy (think Uber and Airbnb), with increasing congestion and emissions pressures, it is no surprise that carpooling has caught the attention of app developers, local authorities and large employers across the world.  

New Zealand examples                                    

In New Zealand, third party facilitated carpool services are still very much in their infancy. Chariot was launched in 2015 - an app-based service which matches drivers with passengers and manages the collection and distribution of money to cover the costs of sharing, in exchange for a small fee.

More recently, 10 local councils across the country have teamed up to get behind Smart Travel, a free app which connects individuals in the same area so that they can share rides either to work or for a one-off trip.

Both Chariot and Smart Travel enable participation by employers offering ride matching services for their employees.

However, as is often the case with new technology, a question mark arises as to what legal implications there could be for those involved in facilitated carpool schemes in New Zealand.

Regulatory approach in New Zealand

Significant changes were made to the rules governing small passenger services with effect from 1 October 2017 in order to create a level playing field across various services, including taxis, shuttles, private hire vehicles, dial-a-driver services, app-based passenger services (like Uber or Savy (featured in FTD's February/March issue) and carpooling services.  For carpooling, the intent was to "[provide] a regulatory environment whereby carpooling is incentivised and the cost of compliance is kept to a minimum".

If you facilitate a service that connects drivers with passengers by electronic or other means, whether or not the facilitator is paid, you need a small passenger service licence.  However, as long as drivers receive no more than the cost-sharing rate set by the Minister of Transport (currently $0.73 per kilometre) and are not reimbursed for their time (or fees, registration or licensing costs), drivers are not required to have a 'P' endorsement on their licence, keep a logbook or comply with work time requirements and their vehicle does not need a 'certificate of fitness' or in-vehicle camera.

Traditional carpooling which is not facilitated by a third party, or which is organised by a local authority, DHB or charity, is exempt from the licensing requirement as long as the only payments are for reimbursing vehicle running costs and not for the driver's time. 

What that means is that privately owned third party apps (like Chariot) are required to hold a passenger service licence, while those run by local authorities, DHBs or charities (like Smart Travel) don't.  The Ministry of Transport defended the distinction on the basis that revenue is being received by commercial operators, thereby justifying a proportionate level of regulation.  However, a licence is required by the commercial operator whether or not the operator renders a charge.

If carpooling charges go beyond sharing running costs, the driver will be treated the same as a taxi or Uber driver and subject to the full regulatory requirements for a small passenger service.  And if the vehicle has 13 seats or more, a large passenger service licence is always required (so don't carpool in a big van!)  

What if there is an incident or accident during a carpooling journey? Where does the liability lie, particularly if employers encourage carpooling by their employees?

Personal injury claims barred, but…

As readers will be aware, the Accident Compensation Act 2001 removes the right to sue for compensation for personal injury in New Zealand in return for universal "no fault" entitlement to prescribed compensation.  However, a change to the Sentencing Act in 2014 allows the court to order offenders convicted of criminal offences (including various negligence based offences) to pay reparations to meet any shortfall in a victim's statutory ACC compensation.  But this potential liability exists whenever you drive on NZ roads, whether carpooling or not.

Insurance unlikely to be affected

While it is prudent to check your own policy carefully, insurance is unlikely to be affected by traditional carpooling.  The policies of a number of leading NZ insurers exclude cover only where the vehicle is being used to carry fare-paying passengers. 

Facilitators disclaim liability

Understandably, both Smart Travel and Chariot disclaim any liability or responsibility for any accident or harm to any ride share participant, claiming they provide their service solely as a venue for communication. Anyone using these sites is expected to exercise their own caution and discretion when using the services and should take all responsible steps to ensure their personal safety.  

Health and Safety

Employers however cannot contract out of their duties under the Health and Safety at Work Act 2015 ("HSWA"). They must ensure, so far as is reasonably practicable, the health and safety of workers while they are at work. This includes when they are in, or operating a vehicle for work purposes.

Whether or not an employee using a carpool promoted by their employer to travel to and from work would be considered to be at work remains to be considered by the Courts in New Zealand.

A 2016 Texas Court of Appeal decision considered the issue and noted that if an employer was liable for an employee accident or incident merely because it encouraged the practise of carpooling, employers would have every reason to end that practice. It went on to state that the risks were not unique to the workplace, but the motoring public as a whole and the only exception would be if the employer exercised control over the carpool which would justify shifting the risk, for example: the type of vehicle used, the qualifications of the driver and the number of passengers in the car.

While there has not been a similar case in New Zealand, section 30(2) of the HSWA says that a person must manage risk only to the extent they have or would reasonably be expected to have, the ability to influence and control the matter to which the risk relates. Our view is that while employers could certainly influence the employee's safety, it is hard to see how they can practically control the risks.  We recommend that any employer who promotes a carpooling scheme to its employees draws its employees' attention to the health and safety risks and the need to exercise appropriate caution and good judgment, particularly given the lack of regulatory safeguards in comparison with other small passenger services.

To read the article in the FTD magazine click here.

Chris Dann

Chris Dann



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M: +64 27 672 8721

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Laura Braid



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