Gig economy decision – Fair Work Commission finds delivery riders are employees
24th Jan 2019
Technological innovation has led to the emergence of flexible work arrangements in the ‘gig economy’, also known as the ‘share economy’ – where workers are typically engaged under a contract for services rather than a contract of service, usually via online platforms or apps.
Flexible work arrangements, which were once considered unconventional, have become prevalent in Australia’s ever evolving economy, and this change is driving the expansion of how we characterise contracts of employment with regards to independent contractors.
Whether the people working for these gig economy businesses are employees or independent contractors is key to defining their rights and obligations in areas such as tax, superannuation and instances of dismissal.
Going to the very heart of this issue is the recent decision of the Fair Work Commission (FWC) which found that Mr Klooger, a food delivery worker engaged by Foodora, was an employee and therefore entitled to bring an unfair dismissal claim.
Joshua Klooger v Foodora Australia Pty Ltd: The facts
Joshua Klooger worked for Foodora for a number of years, delivering food to customers on a bicycle. Over time, the flat rate delivery payments received by Mr Klooger and other such workers had progressively reduced. Mr Klooger was subsequently dismissed for publicly talking about the declining working conditions and remuneration.
In order to decide whether Mr Klooger was unfairly dismissed, the FWC had first to decide whether it had jurisdiction to hear the application, as the law is ambiguous in relation to the status of gig workers as employees or independent contractors.
The FWC applied the multifactorial test from the High Court judgment in Hollis v Vabu to assess the nature of the relationship between Mr Klooger and Foodora.
- Control: Not only was Mr Klooger required to wear Foodora’s uniform and ride a bicycle with the company’s branding, he was also told the geographical location in which he would make deliveries. Essential to the argument of control was Foodora’s ‘batch system’, which ranked its workers’ performance and meant that better workers received better shifts. This ranking system meant that workers, in reality, were forced to take the shifts they were offered by Foodora and did not have the freedom to choose when and where they worked.
- Contractual terms: While the contract between Mr Klooger and Foodora was titled ‘Independent Contractor Agreement’, the terms were in a similar format to an employment contract (such as wearing Foodora branded clothing).
- Subcontracting: Employees cannot subcontract, so a crucial part of Foodora’s argument was that Mr Klooger allowed other drivers to use his online profile to complete shifts. While this delegation did take place, it ultimately required the consent of Foodora.
- Invoices: Mr Klooger was given invoices for his approval and once he approved them he was paid by Foodora. Further, Foodora did not pay annual leave or sick leave entitlements.
Having decided that Mr Klooger was an employee, the FWC also found his dismissal to be unfair and ordered Foodora to pay compensation.
The FWC followed the approach taken in Hollis v Vabu, in which couriers who delivered parcels and letters on bicycles were found to be employees of Crisis Couriers.
What does this mean for the gig economy?
The decision may appear to be a significant win for gig workers. However, it does not necessarily apply to other companies, nor does it tell us anything definitive about the position of delivery workers at companies with similar business models. Therefore, a worker found to be an employee within one model may be characterised only as an independent contractor within another. For instance, a 2017 FWC decision found that Uber delivery workers are not employees!
There is no doubt that this decision will empower unions and gig workers to take a tougher stance on businesses engaging gig workers as independent contractors. However, as significant as this decision is for the gig economy, it is quite unremarkable. The FWC has essentially restated and reapplied principles of law from well-known cases and has not attempted to provide us with a definition of an employee in the current gig economy environment. Nevertheless, the key takeaway message for businesses is that carefully drafted contracts will not be enough – both contractual provisions and the specific relationship between the business and worker are carefully analysed when determining a gig worker’s employment status.
Sam Vasaiwalla is a recent graduate currently completing her traineeship at Zaparas Lawyers.
The views in this article are the writer's own and do not reflect the views of Zaparas Lawyers.
The views and opinions expressed in these articles are the authors' and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).