Most of us are, or have been, part of the ‘gig economy’, whether we are an employer that engages contractors, a customer having takeaway delivered by a meal delivery service driver on a Friday night, or the contractors themselves.
But for employers, correctly classifying ‘gig workers’ is a complicated and crucial task.
Developments in case law
Most recently, on 18 May 2021, the Fair Work Commission (Commission) handed down the decision of Diego Franco v Deliveroo Australia Pty Ltd [2021] FWC 2818, (Deliveroo Decision) which involved an application for unfair dismissal remedy by a former Deliveroo rider, whose supplier agreement with Deliveroo was terminated because he was failing to deliver orders in a reasonable time. Deliveroo raised jurisdictional objections to the claim on the basis that:
- the applicant was not an employee of Deliveroo but instead, an independent contractor; and
- the applicant was not dismissed.
The Commission weighed up the various factors relevant to the proper characterisation of the relationship between Mr Franco and Deliveroo, and ultimately determined that Mr Franco was engaged as an employee, despite aspects of his relationship with Deliveroo including factors that are usually associated with independent contractors rather than employees.
In reaching this conclusion, the Commission noted that the high level of control that Deliveroo possessed strongly supported the existence of employment rather than independent contracting. In addition, the Commission commented that, the fact that Mr Franco could and did work for Deliveroo’s competitors (a factor that traditionally weighs toward the finding of an independent contractor relationship), must be assessed in the context of a modern, changing workplace impacted by our new digital world.
Deliveroo does however say that it will be appealing the decision, and is confident that its riders are engaged as independent contractors.
This decision is in contrast to the Commission’s findings involving an Uber Eats driver, Ms Gupta, in Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd T/A Uber Eats [2019] FWC 5008 and [2020] FWCFB 1698), who was ultimately determined by the Full Bench not to be an employee. The Full Bench decision was appealed to the full Federal Court, however the matter was settled outside of court before a full Federal Court could make a decision.
Future legal trends
Over recent years, there has been mounting pressure, particularly from unions and Labor governments, for legal reform of the Fair Work Act 2009 (Cth) (Fair Work Act), which if implemented would have the effect of providing individual contractors with the same or similar protections as employees.
In 2017, the Senate Committee into Corporate Avoidance of the Fair Work Act recommended that the Fair Work Act be amended to ensure that all workers have the protections of the Fair Work Act, as well as access to the labour standards, minimum wages and conditions established under the Fair Work Act, so that these rights accrue to dependent and on demand contracting, preventing those arrangements from being disguised as independent contracting.
More recently, the Victorian Government has also expressed its support of the 20 recommendations made by the Inquiry into the Victorian On-Demand Workforce, that would have the potential to apply to contractors and included developing a code of conduct that better protects on-demand workers, and looking into whether a dedicated Victorian support agency could help workers and businesses find clarity around work status and resolve disputes. The Victorian Government has made commitments towards progressively implementing the recommendations. It is important to note however that this is a State based initiative.
The traction for expending the rights and protections available to individual contractors is slow but there are nevertheless movements from both federal and state governments on the issue, in addition to the impact the Commission decisions in the likes of Deliveroo and Uber Eats have in this space.
Consequences and considerations for employers
The recent Deliveroo Decision is a timely reminder to employers of the complexities involved with engaging contractors and consultants, and the importance of correctly classifying workers.
If you wish to discuss your business’ current engagement practices to ensure any legal risks are mitigated, please reach out to our office.
This article was written by Heinz Lepahe, Partner, Thea Price, Special Counsel, and Anna Stubbersfield, Solicitor
