Why Independent Contractors?
Firstly, the question arises as to why platforms such as Deliveroo wish to use independent contractors, as opposed to directly employing drivers/delivery staff themselves. Broadly, an independent contractor is a person who provides agreed services (such as a set job or recurring task), where they are able to negotiate their own fees, accept or refuse jobs as they wish, and can work for more than one client at a time.
As opposed to employees, independent contractors are viewed as ‘independent’ or separate to a business, and resulting, independent contractors are not entitled to payment beyond fees for service. As such, it is preferable for some businesses to engage independent contractors as opposed to employees, as they are not liable to pay entitlements such as superannuation, statutory leave, loadings/allowances, or incur risk of unfair dismissal, general protections, or other claims employees may be entitled to bring. Further, with the expansion of flexible working platforms, many individuals would prefer to be engaged as an independent contractor for a variety of personal and financial reasons.
The Deliveroo Case
When a person seeks to assert that they are an employee as opposed to an independent contractor, the Courts and Commissions apply what is known as the ‘multifactorial test’. This test seeks to look at specific factors to assess whether the total relationship between the parties is that of employer and employee or principal and contractor. These factors include:
- Control over how the work is performed;
- The intention of the parties when entering into a contract;
- How the person is remunerated and/or taxed;
- Whether equipment/tools/uniforms are provided to the person (and how they represent themselves);
- Whether the person is obliged to work;
- Whether the person can decide their hours of work and leave;
- Whether the person can delegate work to others; and
- Whether the person can perform work for other companies/persons.
Mr Franco argued that Deliveroo had the capacity and ability to exercise control over how his work was performed, and did so via its engagement system/digital platform. Mr Franco primarily had to book in or provide his availability for deliveries, was assigned and overly compelled to take jobs, the fee paid for his services was non-negotiable, and he wore Deliveroo branded clothing/equipment. Further, although Mr Franco worked for competitors of Deliveroo, he argued this was akin to a casual or part-time employee working for more than one employer.
Deliveroo sought to argue that Mr Franco was not an employee where:
- He was not required to perform services for Deliveroo personally, he was permitted to work largely whenever and wherever he chose, and for whatever length of time he wished;
- He was able to reject or accept work offered to him without consequence;
- He was able to perform work for multiple entities at the same time;
- He entered into a contract expressly providing that he was a supplier in business on his own account;
- He was paid on invoice for each delivery performed;
- He provided, at his own expense, the two principal tools required to perform his duties;
- When he completed deliveries he determined what route to take; and
- He was required to indemnify Deliveroo for any loss incurred as a result of his or his delegate’s negligence.
Commissioner Cambridge ultimately found in favour of Mr Franco, stating that the factors of Mr Franco’s engagement by Deliveroo, like the colours from an artist’s palette, emerged to form a complete picture, being that ‘the correct characterisation of the relationship between Mr Franco and Deliveroo is that of employee and employer’. Deliveroo have indicated an intention to appeal.
The Deliveroo case acts as a reminder to employers of the risks of engaging persons as independent contractors, and how the multifactorial test applies to assess whether someone is an employer or contractor. Employers need to assess whether it is appropriate to engage a contractor or an employee, and that risk of legal action may arise if workers are engaged on an inappropriate basis.
Should the topic discussed in this article be relevant to your business, it is always recommended that you seek appropriate legal advice. Saines Legal is a full-service employment law firm and are here should you require advice. Do not hesitate to contact us via email@example.com or (07) 3324 1055, to organise a consultation.
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.