FWO said Uber drivers were not employees, could the outcome of this court case change things?

A former Deliveroo rider is taking the food delivery service company to court with allegations that he was underpaid. The outcome of this case will prove interesting considering the Fair Work Ombudsman’s earlier decision that Uber drivers are not classified as ‘employees’. 

The Transport Workers Union will argue on behalf of their client that he was working as an employee and therefore entitled to the legal minimum wage under the Fair Work Act. However, there is still a large grey area when it comes to the classification and rights of gig-economy workers in Australia.

The FWO’s Uber decision

The Fair Work Ombudsman (FWO) conducted a two-year investigation into whether or not Uber Australia had entered into a ‘sham-contracting’ arrangement with its drivers. It was found that Uber Australia drivers were in fact not classified as employees but rather as independent contractors. 

However this ruling only pertained to Australian Uber drivers and left a lot of questions unanswered for the rest of those working in the gig economy. At the time of the decision, Fair Work Ombudsman Sandra Parker said, “Uber Australia drivers have control over whether, when, and for how long they perform work, on any given day or on any given week”. Accordingly, the FWO will not classify them as employees. 

It has been previously suggested that a new class of employee should be established that relates specifically to gig economy workers. Similarly, a new regulatory body may be required to monitor the working conditions of gig economy workers and deal with the complaints of workers.

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Why was a Foodora rider eligible for unfair dismissal?

Just last year, the Fair Work Commission upheld a decision that classified a rider from food delivery company Foodora as an employee. Similarly, as in the case of the Deliveroo rider, the Transport Workers Union provided assistance with the unfair dismissal claim. 

In order to find that the rider was dismissed “without any proper, prior warning, was plainly unjust, manifestly unreasonable, and unnecessarily harsh” the Commission was required to find that the rider was an employee of Foodora. 

The decision was made on the basis that Foodora has a high degree of control over its workers, in particular its “batch” system which rates its riders in terms of performance. 

Additionally, requirements such as the necessity to wear a uniform point to an employee relationship rather than an independent contractor relationship. These distinctions enabled the rider to make an application for unfair dismissal, on the grounds that he was fired for whistleblowing about the company’s poor working conditions. 

Pending Deliveroo decision 

In the case of Deliveroo, the outcome will likely have a significant flow on effect for all those engaged by the company in Australia.

If the Court finds that the Applicant was an employee, it could well open the company up to further litigation by its other riders who may similarly seek to agitate claims for underpayment, sham contracting and unfair dismissal. In addition to any potential underlying liability, there is also the risk of pecuniary penalties being levied for such alleged breaches.

Inconsistency in the rulings

We are seeing varying rulings about whether or not gig economy workers are employees or contractors. The varying rulings show both the complexity and  difficulty of the court’s job when it comes to applying the existing set of historical legal precedents to what is a seismic change in the way work is now performed in our digital era. 

The underlying test that the courts use to determine the status of a relationship as either ‘employment’ or ‘contract for services’ is multifaceted. Things such as the degree of control over how work is performed, expectation of work and method of payment will be considered, but no individual factor is determinative. 

Each case will ultimately turn on its own set of facts and it is only by looking at those relevant facts from a distance that the question is resolved. Because of this, it’s possible that we will continue to see varying outcomes depending on the particular gig economy operator we are talking about. 

Notwithstanding, cases like the present Deliveroo matter are highly instructive as many of the major gig economy operators engage their workers in similar ways using similar technology.

Arthur Hambas is a Senior Associate at McDonald Murholme.