Article written by Michael Short
News reports have recently reported that the families of two Uber Eats riders who died during their employment with Uber Eats have filed applications for statutory death benefits with the NSW Personal Injury Commission. These deaths brought home the many complex issues surrounding the GIG economy and its impacts on employment law. Much will depend on whether the Commission concludes the delivery riders were employees or contractors.
We await the outcome of these applications with interest.
In August, the Full Bench of the Fair Work Commission overturned the Commission’s original decision in favour of an employee, Mr Franco, in Deliveroo Australia Pty Ltd v Diego Franco [2022] FWCFB 156. This case involved an unfair dismissal application following the termination of Mr Franco’s employment. Mr Franco maintained he was an employee, and Deliveroo claimed he was a contractor.
The Full Bench has found Mr Franco to be a contractor. The Full Bench placed great weight on the legal rights and obligations agreed in the written contract between Mr Franco and Deliveroo. It reverses the May 2021 decision of Commissioner Cambridge that the Deliveroo delivery driver was an employee rather than an independent contractor.
As you can see, the state of the law is in considerable flux.
ARE THESE GIG ECONOMY WORKERS EMPLOYEES OR CONTRACTORS?
Well, it appears that the answer is that they are often regarded as contractors. In what some might say is a cynical exercise, gig economy businesses entered into detailed contracts with their delivery riders using agreements that aim to exclude them as employees. These contracts are prepared unilaterally by the company and are not amendable. The companies maintain that these riders are contractors and not employees. Companies often argue that working in the GIG economy offers individuals flexibility and convenience. They claim the gig economy allows workers the opportunity to work when and how often they want and to balance work with personal commitments such as study, family responsibilities or hobbies.
Frequently, the writer feels that this ignores the truth and the reality of the situation: these workers are subject to extensive direction by their GIG economy employer. They wear uniforms, are required to undertake duties in an organised fashion and are subject to rules, policies and procedures that control where and how they carry out their work.
In early 2022, after the initial decision went in favour of Mr Franco, the High Court handed down its decision in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA.
1. This case emphasised the importance of the initial agreement between the parties when determining the nature of the relationship between the worker and the company. It effectively removed the ability to look outside the contract and consider “the reality” of the relationship. Using this approach, the Full Bench of the Fair Work Commission analysed the terms of the agreement between Mr Franco and Deliveroo and, in doing so, overturned the original decision that went in favour of Mr Franco. The Full Bench found that as the contract gave Mr Franco the right to control certain aspects of his work, including what type of vehicle he used, it took primacy over the actual control being exercised by Deliveroo.
Feeling constrained by the High Court decision, the Full Bench went on to say, Had we been permitted to consider the above matters, as the Commissioner did, we would have reached a different conclusion in this appeal. In reality, Deliveroo exercised a degree of control over Mr Franco’s work performance. Mr Franco presented himself to the world with Deliveroo’s encouragement as part of Deliveroo’s business, his provision of the means of delivery involved no substantial capital outlay, and the relationship was one of personal service. These matters, taken together, would tip the balance in favour of a conclusion that Mr Franco was an employee of Deliveroo. However, as a result of Personnel Contracting, we must close our eyes to these matters.
Ultimately, the Full Bench found Mr Franco was not an employee and consequently not entitled to protection from unfair dismissal laws within the Fair Work Act. Accordingly, the Commission had no jurisdiction to determine Mr Franco’s unfair dismissal application.
It is noteworthy that the Full Bench concluded its decision by stating, “[r]egrettably, this leaves Mr Franco with no remedy he can obtain from the Fair Work Commission for what was, plainly in our view, unfair treatment on the part of Deliveroo.”
HOW DOES THIS HELP YOU?
As an employer wanting to engage contractors instead of employees, this decision and that of the High Court in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 should provide you with a greater degree of comfort that you can proceed in the knowledge that the contract you enter into between yourself and the contractor is likely to be upheld.
As a contractor, this decision provides you with certainty too. The arrangement entered into under the contract you sign will remain in place until the contract is concluded or amended. As such, it is critical that you understand every aspect of the agreement before you sign it.
This summary contains general advice only and does not take into account your particular circumstances. For advice on your particular circumstances, please make contact with any of our above-mentioned experts.
