Australian courts have recognised that no hard and fast rule exists in relation to the accurate categorisation of gig workers due to the varying nature of their platform and engagement terms. Rather, each individual case needs to be examined on its merits.
But what characteristics lend to the classification of ‘employee’, with its inherent entitlements including protections from unfair dismissal, versus the traditional categorisation of ‘independent contractor’? This question is considered in more detail below.
Koolger v Foodora[1]
In 2018, the Fair Work Commission (FWC) provided direction regarding this jurisdictional question when it found that former Foodora Australia Pty Ltd (Foodora) delivery rider, Josh Koolger, was an employee and consequently entitled to bring unfair dismissal proceedings.[2] This was the first instance in which an Australian tribunal or court determined in favour of the employment status of a gig worker, representing a significant development on the issue.
However, it is important to consider that Mr Klooger was not an entirely typical food delivery rider: during his relationship with Foodora, he progressed from regular delivery driver to operating a ‘substitution scheme’ (enabling other riders to work via his Foodora account) and was later employed full-time as a ‘Driver Manager’.
The breakdown of the relationship resulted from Mr Koolger’s engagement in ‘activism’ on behalf of Foodora riders, including through the media and the Transport Workers Union (TWU). Foodora consequently dismissed Mr Koolger, who then made an application to the FWC on the basis he was an employee, and his dismissal was unfair.
Commissioner Cambridge of the FWC, addressing Mr Klooger’s work as a regular rider, applied the well-established common law ‘multifactorial test’ to the circumstances of the relationship between the parties. Key factors considered included the following:
It was therefore the combination of these factors which led to the FWC finding that an employment relationship existed.
Further, Commissioner Cambridge provided general observations on the issue which indicate that the contracting model of other gig platforms may be open to scrutiny:
As in this case, the corporation (Foodora) stipulated the requirement for individuals to obtain an Australian Business Number and to create, at least the appearance, that the individual operates a business of their own. The corporation then avoids the many responsibilities and obligations that it would normally have as an employer. The responsibility for compliance with many important regulatory obligations including but not limited to taxation, public liability insurance, workers compensation insurance, statutory superannuation, licensing and work health and safety, is transferred from the corporation to the putative contractor.[7]
Contracting and contracting out of work, are legitimate practices which are essential components of business and commercial activity in a modern industrialised economy. However, if the machinery that facilitates contracting out also provides considerable potential for the lowering, avoidance, and/or obfuscation of legal rights, responsibilities, or statutory and regulatory standards, as a matter of public interest, these arrangements should be subject to stringent scrutiny. Further, if as part of any analysis involving the correct characterisation that should be given to a particular relationship, an apparent violation of the law, or statutory or regulatory standards is identified, as a matter of public interest, any characterisation of the relationship which would avoid or minimise the likelihood of such violation should be preferred.[8]
The landmark decision in Foodora provides for important precedent as it clearly undermines key arguments traditionally put forward by gig economy proponents; mere presence of some form of subcontracting is not sufficient, and nor is non-exclusivity. Further, the presence of performance management also damages arguments that gig workers are independently contracted.
Gupta v Porter Pacific & Anor[9]
The classification issue was later considered by the Full Federal Court in 2020 when food delivery worker Amita Gupta sort to bring about a claim of unfair dismissal against Uber Eats Australia Pty Ltd (Uber Eats).[10]
Ian Neil SC, who represented Uber Eats, presented the Court with a novel argument supporting its claim that delivery riders are not employees; that delivery ‘partners’ are free to negotiate lower fees and can abandon meals after collecting them. Mr Neil added that the only possible consequence of such an action was that she “might be obliged to account for the meal itself” as she “held the meal, at law, as a bailee”.[11]
Justice Mordy Bromberg responded skeptically on the basis that it was a “bit hard to imagine” that Uber Eats would “continue to provide tasks for a person who keeps absconding with the meal”. Further, this lack of obligation would “certainly make one not an employee”, but “probably wouldn’t make one an independent contractor either”.
The judges sought information on whether there was an alternative relationship between Uber and the delivery workers, if not employer and employee, but Mr Neil said the exercise would be “productive of error” as it “inverts the statutory enquiry”.
Consequently, Justice White responded: “I’m puzzled as to why your client doesn’t offer the Court an analysis of the true factual element of the characterization of the relationship?”. Further, that Uber had “drawn up this careful contract with all these provisions in it, and either does not have a view as to what is the correct characterisation of the relationship or is not willing to disclose it to the court”.
According to TWU national secretary Michael Kaine, the Court made it clear that “Uber was on the ropes”, leaving settlement the only option in the face of a “potential judgment which would have utterly altered how the company and other gig economy companies operate In Australia”.
Further, he pointed out that the judges’ questions to Uber “exposed just how utterly ridiculous and farcical its contract contortions are when it comes to getting around our labour laws”.
UK Uber Decision
The issue has also been addressed internationally, with the decision made last month by the UK’s Supreme Court to classify Uber drivers as ‘workers’ under UK industrial relations laws.[12] Consequently, gig workers in the UK are now entitled to national minimum wage, paid leave, rest breaks and protection against unlawful discrimination.[13]
This departure from the traditional assertion that Uber drivers are independent contractors, with working time being represented by periods of carrying passengers, may have a significant influence in the Australian context.
This decision sited and upheld the long-standing principle established in Autoclenz[14]: ‘if it walks like a duck, quacks like a duck, then it is probably a duck’. Lord Leggatt preferred this approach as it also emphasises the relative bargaining power and “looking beyond the terms of any written agreement to the parties’ ‘true agreement’ as ‘a purposive approach to the problem’. Hence, the terms of the contract are a mere starting point;
if the relationship has the practical characteristics of employment, the worker is an employee, not an independent contractor”.
Circumstances which lead to a categorization of ‘worker’ included the fact that Uber set the fare, imposed contractual terms without their input, used monitoring and customer ratings to significantly control how they performed services, and prevented them from exchanging contact details with passengers.
The UK Supreme Court also found that drivers’ work time begins once logged in to the App within their licensed operating area and ‘ready and willing’ to accept trips. This is significant as it examines the periods in which drivers are entitled to minimum statutory entitlements.
This decision was discussed in Australian parliament, where IR Minister Christian Porter challenged the applicability to Australian law highlighting that the classification of the term ‘worker’ is a UK-specific classification. On a sliding scale, one end being employee and the other independent contractor, the UK classification of ‘worker’ sits somewhere in the middle. Unlike an employee, a worker is not protected from unfair dismissal nor does it entitle them to a notice period or redundancy pay. However, Shadow IR Minister Tony Burke nevertheless insisted the ‘landmark’ ruling could have implications for the gig economy around the world. Further he asserted that “Australia doesn’t need to wait for the courts here to find the same thing” and that “the government could act right now to stop the exploitation of gig workers”.
The TWU national secretary, Michael Kaine, again provided commentary by recognizing that the UK decision could have huge implications for Australian law by establishing that gig workers have rights. Australian Barrister, Sheryn Omeri, who argued the UK Supreme Court case on behalf of the drivers, told the Australian Financial Review that the judgment has essentially “done half the work for Australian Courts”.[15] “What is left for Australian courts to do is consider whether the requirement that it imposes on drivers, in the control of the drivers, takes them as far as being employees”.
Potential legislative changes
It is suggested that these evolutions in the common law definition of ‘employee’ should be addressed by parliament in order to clarify the issue. In this regard, the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Omnibus Bill) represents the Federal Government’s proposed IR reforms. Among the proposed reforms, Omnibus recommends a new definition to ‘casual employee’ under the FWA.
The Opposition Leader, Anthony Albanese, has expressed concerns over the proposed changes within the Omnibus Bill and emphasises the need for workplace laws to evolve with the nature of work and technology with direct reference to gig workers.[16]
What the amendments will look like only passed through parliament is yet to be seen.
Concluding remarks
Australian law is clearly still playing catch-up amidst significant developments in the gig worker platform. With the sophistication and accessibility of mobile technology, and the ramifications of a global pandemic in which workers have had to be adaptable to maintain an income, gaining clarity on the issue is of significant importance.
Whether its reliance on the common law interpretation, legislative amendment to the definition of employer or even recognition of an intermediate classification of ‘worker’ consistent with the UK definition, those with involvement in gig work need to start anticipating the effect of these changes now.
Commentary suggests, based on the UK decision, that gig work providers should consider converting to an employment model, start paying superannuation and other base entitlements under the Award, and thereby limit future liability.
Call it what you will, but always keep in mind; if it looks like a duck, sounds like a duck, then it is most likely a duck.
It is always recommended that an employer seek appropriate legal advice prior to taking action which may leave them open to liability. Saines Legal is a full-service employment law firm and are here should you require advice. Do not hesitate to contact us via info@saineslegal.com.au or (07) 3324 1055, to organise a consultation.
Disclaimer
The contents of this article are general in nature and is for information purposes only. The content of this article does not constitute legal advice and should not be used as such. Should you require assistance with a specific legal matter, it is recommended that you seek appropriate advice.
Authors Emma Marshall (Lawyer) and Nigel Saines (Principal)
[1] [2018] FWC 6836
[2] Joshua Klooger v Foodora Australia Pty Ltd [2018] FWC 6836
[3] Ibid [72]
[4] Ibid
[5] Ibid [78]
[6] Ibid [89]
[7] Ibid [105]
[8] Ibid [106]
[9] [2020] FWCFB 1698
[10] Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a Uber Eats [2020] FWCFB 1698
[11] Transcript of Proceedings, Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a Uber Eats [2020] FWCFB 1698 (Full Federal Court, November 27, 2020)
[12] Uber BV and others (Appellants) v Aslam and others (Respondents) [2021] UKSC 5 On appeal from [2018] EWCA Civ 2748 (19 February 2021)
[13] ‘UK Uber ruling challenges gig economy model: Unions’, Workplace Express (22 February 2021), <https://www.workplaceexpress.com.au/nl06_news_selected.php?act=2&stream=1&selkey=59817&hlc=2&hlw=uber&s_keyword=uber&s_searchfrom_date=631112400&s_searchto_date=1614903345&s_pagesize=20&s_word_match=2&s_articles=1>
[14] Autoclenz Ltd v Belcher [2011] UKSC 41
[15] ‘Barrister sees test for Australia after UK Uber ruling’ Financial Review (22 February 2021) <https://www.afr.com/work-and-careers/workplace/barrister-sees-test-for-australia-after-uk-uber-ruling-20210221-p574e5>
[16] Anthony Albanese, ‘Secure Australia Job Plan’ (Speech, TAFE Queensland, Brisbane 10 February 2021)