As the political debate about ‘insecure work’ rages on, the Fair Work Commission (FWC) is dealing with rising disputes over the true nature of employment relationships. While the tribunal has been cautious to deem ‘gig economy’ contractors to actually be employees, recent determinations indicate the tide may be turning.

The past fortnight has seen two significant decisions that may reflect changing attitudes within the FWC in relation to ‘independent contractors’ working within the gig economy.

The most recent decision, handed down on Friday 21 May, saw Deputy President Gostencnik determine a games coordinator who hosted ‘Pick a Box’ at various entertainment venues was in a casual employment relationship, not one of a contractor, with the principal.

In his decision, DP Gostencnik said determining the true employment relationship required an examination “beyond the mere consensual label attached to the relationship by the parties”.

Despite accepting the fact that the games coordinator invoiced the principal business under her ABN for each event she hosted, DP Gostencnik nonetheless determined she was an employee, and therefore able to pursue her adverse action claim, based on a number of other factors.

Such factors included that the games coordinator was required to wear the company’s branded t-shirts and was paid by the hour instead of for a completed project or event.

This followed a more significant decision handed down by Commissioner Cambridge on Tuesday 18 May in relation to an unfair dismissal application made by a driver for app-based food delivery service, Deliveroo. A short summary follows.

Deliveroo driver ‘an employee’ – FWC

The driver had his supplier agreement terminated by Deliveroo in April 2020 for failing to make deliveries in a reasonable time.

He was represented in his unfair dismissal claim by the Transport Workers’ Union (TWU) and was also heavily involved in the TWU’s campaign in relation to the gig economy, which publicly criticised Deliveroo.

Deliveroo made a jurisdictional objection on the basis that the delivery driver was not an employee.

The parties agreed that the relevant legal principles adopted a multifactorial approach with no single factor being decisive in determining whether the relationship was one of employment or independent contractor.

Closely examining the nature of the arrangement the Commissioner found:

  • Deliveroo had access to a vast repository of data and metrics on delivery drivers which meant it had the ability to exercise control over the worker (even though it chose not to do so);
  • While Deliveroo expressly permitted drivers to work for competitors simultaneously this did not prevent the existence of an employment relationship;
  • Delivery drivers could delegate their work to another person and that arrangements involving shift or job swaps are frequently encountered in the context of an employment relationship.
  • The delivery driver had no capacity to negotiate terms of the supplier agreements and in reality Deliveroo presented the contractual arrangement as fait accompli.
  • Although Deliveroo did not compel or require drivers to use Deliveroo branded attire and equipment, it encouraged them to present to the world as a part of the Deliveroo business.

Therefore based on the relevant indicia Commissioner Cambridge concluded that the relationship between the parties was that of employee and employer.

He found there was no valid reason for dismissal and the dismissal involved an unjust and unreasonable process.

Deliveroo was ordered to reinstate the driver, maintain continuity of service, and restore lost pay.

At time of writing, Deliveroo indicated it would appeal the decision.

Contrasting earlier ‘gig economy’ decisions

This decision is in stark contrast with a significant full bench decision last year which found that an Uber Eats driver terminated from the food delivery platform was not an employee.

The full bench applied the same multifactorial approach as the single member in the Deliveroo decision which found there were three critical factors against a finding of employment.

In that decision, the full bench found:

  • Uber Eats exercised no control over the delivery driver’s work, it was entirely in the driver’s control when and for how long she logged in and there was no obligation to accept any delivery requests.
  • Uber Eats placed no practical impediments on the driver to work for competitors simultaneously, and this “pointed decisively away” from finding an employment relationship.
  • There was no requirement for the driver to present as part of Uber Eats business (no uniform, cap or logos elsewhere).

The full bench did not consider the relationship between the driver and Uber Eats to have “the usual and essential hallmarks of an employment relationship” and therefore concluded she was not an employee.

A similar finding was made in 2019 when, after considering the same indicia, the FWC found an Uber driver (the passenger transport service of the brand distinct from food delivery) was not an employee.

In that decision, Commissioner Bisset held the absence of the “work-wages bargain” in the relationship did not support a conclusion that the driver was a “servant” of Uber.  She agreed with the driver that there was a business relationship, but that it did not create an employment relationship.

Implications for Employers

While the escalating number of disputes over the nature of an employment relationship are primarily arising from digital app-based ‘gig economy’ businesses, employers across all sectors should be watching developments closely to plan for and mitigate future risk.

Most sectors of the economy utilise independent contracting in some capacity, even if only a small part of its business model and not the dominant characteristic as per Uber or Deliveroo.

Employers should be cognisant that the union movement is ramping up its campaigns against ‘insecure work’, there is an intense scrutiny on independent contracting arrangements, and the FWC’s contemporary practice is to closely examine every minute aspect of the relationship between businesses and independent contractors when services are performed.

AMMA’s Advisory Services team is available to assist members with auditing existing independent contractor arrangements and/or setting up of new contracting arrangements, to ensure the true nature of the relationship remains that of principal/contractor, and could not be successfully challenged as being employer/employee.

Further, in its advocacy for a well-functioning industrial relations system that promotes freedom of choice for how individuals they utilise their talents, AMMA will continue to defend the legitimacy, merits and mutual value of true independent contracting arrangements, particularly in the highest paying sectors of the economy where such arrangements overwhelmingly favour the individual.

For more information on any of the themes or cases explored in this article, contact [email protected]