Uber driver is a contractor, but Foodora rider is an employee – huh?

By Jess Toop in Legal Updates Posted March 25, 2019

Gig work is on the rise – you are likely to have used taxi alternatives such as Uber, Ola or DiDi and arranged food delivery via Deliveroo or Foodora. Perhaps you have engaged someone to walk your dog, move some furniture or assist with hard drive recovery via Airtasker?

On the basis that from an employment law perspective, gig workers are contractors, they are not protected by the employee safety net provided by the Fair Work Act 2009including minimum leave, notice and termination entitlements and the national minimum wage. It’s of course not surprising that this has raised the ire of the union movement and prompted calls for gig and labour hire workers to be provided the same minimum conditions as employees, including access to unfair dismissal and collective bargaining.

Against this backdrop, decisions of the Fair Work Commission involving a determination of the employee vs. contractor status of gig workers continue to attract interest.

The Uber decisions

The much-awaited first decision on gig worker status in Australia was handed down in December 2017 in respect of an Uber driver, Michaeil Kaseris, who claimed to have been unfairly dismissed. The company operating the Uber software platform in Australia, Rasier Pacific V.O.F (“Uber”), objected to the claim on the basis that Mr Kaseris was a contractor and consequently lacked jurisdiction to bring the claim.

Uber’s contention was that it was an operator of a ride-sharing software platform that had entered into a services agreement with Mr Kaseris, pursuant to which he was provided with access to the partner version of the Uber app. Mr Kaseris could log on to the app and accept rides from members of the public, thereby using the app to make money. Further, Uber argued, its relationship with Mr Kareris was that of principal and independent contractor, and as such he was barred from claiming unfair dismissal.

The Commission applied the longstanding test for determining employee vs. contractor status: looking at the relationship as a whole, with respect to relevant factors, was the relationship one of employment?

No, concluded Deputy President Gostencnik, citing factors such as:

  • Control – Mr Kaseris had “complete control” over the way in which he conducted the driving services and chose when to log in and out of the app; he was free to choose how he operated and maintained his car; he was also free to accept or reject rides (although Uber did impose certain service standards that somewhat limited his control in that regard);
  • Branding – the services agreement prohibited Mr Kaseris from wearing uniform or displaying the Uber logo on his car;
  • Equipment – Mr Kaseris provided his own car, insurance, smart phone and mobile data;
  • Remuneration – Mr Kaseris was paid a proportion of the fee charged to the customer for each trip (rather than a wage), and did not receive employment benefits such as leave or superannuation.

A decision that made similar findings was handed down with respect to another former Uber driver, Janaka Pallage, in May 2018.

And then came the Foodora decision…

A gig worker decision late last year bucked the trend – the Commission held that a former “Corporate Rider” (delivery rider, Joshua Klooger) for Foodora Australia Pty Ltd (“Foodora”) was an employee (and consequently eligible to bring an unfair dismissal claim). This was despite the fact that (like in the Uber cases) the parties had entered into a written services agreement stipulating that Mr Klooger was engaged as contractor.

Applying the same multi-factorial test, Commissioner Cambridge noted the following indicia in support of his conclusion that the relationship between Mr Klooger and Foodora, was one of employment:

  • Nature and manner in which work was performed – Mr Klooger worked shifts that were offered and selected via a shift allocation app on a weekly basis – the shifts had a fixed start time, finish time and geographical location – arrangements very similar to those for typical casual employees;
  • Control – Foodora had “considerable capacity” to control the manner in which Mr Klooger performed work, including fixing start/finish times and place of work. Foodora also ranked work performance via certain metrics, and gave highly ranked riders priority in terms of choice of shifts;
  • Branding – Mr Klooger wore Foodora branded attire and utilised Foodora branded equipment, in accordance with the service contract.

What does this mean for the gig workforce?

  • The multi-factorial approach to distinguishing an employee from an independent contractor evolved long before the gig economy and is problematic in light of evolving nature of the digital economy and the new ways of working that are being put into practice.
  • We can expect to see further test cases by gig workers asserting that they are employees – and litigation outcomes are likely to continue to differ depending on the specific factual scenario at hand.
  • Businesses who are seeking to utilise gig workers and engage them as independent contractors should exercise caution and obtain specific legal advice to ensure that the way they operate in practice, as well as their written documentation, align to the indicia of a genuine principal-contractor relationship.

This is general advice only. Liability limited by a scheme approved under Professional Standards Legislation. © 2019 Toop Workplace Law Pty Ltd