When the High Court decided in 2001 that an injured courier was, in fact, an employee rather than an independent contractor, the decision had a significant impact on the relationship between workers and business. This shift is occurring again in relation to the Gig Economy. In Hollis v Vabu Pty Ltd (2001) 207 CLR 21, the Court determined that what had once been assumed as an independent contractor, being a courier delivery rider, was determined to be an employee. The Court found that factors such as level of skill, control and work hours, presentation to the public, and tools of trade were all relevant to whether the legal relationship was one of contractor or employee. The Court in effect, developed the multi-factorial test to determine this issue, which has been applied consistently since to determine whether a worker is an employee or independent contractor. Later decisions have added other qualities, such as an ability to subcontract work, in determining the nature of an engagement.
However, there has been controversy, for some time now, as to whether or not participants in the Gig Economy are, in fact, employees or contractors. The Gig Economy is typically based on flexible, temporary, or freelance jobs, involving the connecting of clients or customers with services through an online platform. Gig workers are those who take on freelance jobs on-demand and can include such individuals as handymen, IT workers, consultant accountants, tutors, and drivers. These individuals might work multiple freelance jobs at once and enjoy a significant degree of freedom as to when and what jobs they undertake. Notwithstanding these freedoms, the Transport Workers’ Union has been advocating that Gig workers who drive for ride share and food delivery services, who have historically been paid less, work more unpaid hours and are less satisfied than other workers, should enjoy the rights and entitlements afforded to employees.
Australian Courts and Tribunals have wrestled with the question of whether Gig Economy workers are independent contractors or employees. According to a 2018 report from the Bankwest Curtin Economics Centre, the Gig Economy represents 11.6% of the workforce and many of those working in the Gig Economy do so as independent contractors.
In 2019, the Fair Work Commission ruled that Ms Amita Gupta, an Uber Eats driver, was an independent contractor and was thus not covered under unfair dismissal laws pursuant to the Fair Work Act 2009 (Cth), despite being removed from her role as ‘Delivery Partner’, for failure to meet deadlines. Her appeal to the Full Bench of the Fair Work Commission (“FWC”) was also dismissed. Despite the view of the majority of the Full Bench that some factors leaned towards Ms Gupta’s characterisation as an employee (including the fact that Ms Gupta’s work did not involve the exercise of any particular trade or skill) she was, nonetheless, capable (even when logged on) to perform work through other competitor food delivery apps or perform other types of passenger or delivery work provided this did not compromise her capacity to complete Uber Eats deliveries within delivery time expectations. Ms Gupta appealed to the Federal Court and following oral submissions before the Full Court on 27 November 2020, Uber settled with Ms Gupta when Federal Court judges questioned the company’s argument that drivers are not employees.
This issue has been recently examined in the United Kingdom. The UK Supreme Court recently determined, in Uber BV and others (Appellants) v Aslam and others (Respondents)  UKSC 5 (“Uber Decision”), that Uber drivers are “workers”. Under English law, a “worker” is an individual who falls between the categories of employee and independent contractor. They must provide their services personally and enjoy paid work (under employer control), but are free, without penalty, to accept or reject any offer of work made to them. “Workers” enjoy the right to be paid, at least, the national minimum wage, receive annual paid leave and some other benefits. The Court was not required to determine whether the appellant drivers were employees but did find that the drivers undertook to personally perform work or services and despite accepting work via mobile phone apps, were nonetheless subject to ‘control’.
Australian law does not recognise this intermediate classification of “worker”, moreover, it only recognises the relationships of employee or independent contractor. Nonetheless, Ms Sheryn Omeri, who appeared as junior Counsel for the drivers in the Uber Decision, is of the view that the UK Supreme Court has done “half the work” for Australian courts because they have already assessed that Uber:
- sets the fare and prohibits drivers from negotiating with their passengers other than for a lower fare;
- sets non-negotiable contract terms to which drivers must perform the services;
- constrains the driver’s choice about which fares to accept by effectively punishing drivers if too many trips are declined or cancelled;
- exercises control over the way drivers deliver their services by disciplining and potentially terminating the relationship with a driver in the event they receive too much negative feedback; and
- restricts communications between passenger and driver to the minimum necessary to perform the particular trip and takes active steps to prevent drivers from establishing any commercial relationship with a passenger capable of extending beyond an individual ride.
Ms Omeri explained that it is entirely understandable that many Gig Economy companies aim to create a “standardised service”; however, in creating a standardised service, a company such as Uber will “inevitably need to exercise some control”.
What does this mean for the Australian Gig Economy? In response to the Uber Decision, Uber UK has committed to a “better deal” for its delivery partners and, in a show it intends to follow suit, the United States Department of Labor (on 19 February 2021) withdrew its 2019 “Opinion Letter” which supported the Gig Economy companies’ arguments that workers set their own hours, were free to find work with competitors, and were not an integral part of the business because they merely used the software the company creates.
If the Australian Federal Government does not provide some form of legislative framework for certain Gig Economy workers; particularly, those that are subject to a significant degree of control as is the case with some workers working for ride sharing companies, it would be a matter for the Courts to conclude whether the worker is an employee or an independent contractor. To date, the decisions have erred largely on the side of independent contractor, however the Uber Decision may carry some weight in future decisions. Furthermore, the Uber Decision, highlights that the written contract is ‘not a starting point’ in determining the nature of a relationship. It is merely a factor to be examined, including evidence of how the parties conducted themselves in practice, and what their expectations of each other were.
If on review a court determines that a gig economy worker is in fact an employee it may mean that certain established Gig Economy companies will be obliged to provide employment entitlements to these individuals under the National Employment Standards, such as paid annual and personal leave, long service leave, redundancy pay, and payment of at least the national minimum wage. Moreover, other statutory protections such as for unfair dismissal will apply. Similarly, in the event Gig Economy employees provide services or perform functions that would otherwise attract the coverage of a modern award, Gig Economy companies could be subject to historic underpayment claims.
The flipside of the “control” exercised by companies such as Uber and other delivery app businesses, is where a Gig Economy company is prepared to withstand the ‘vulnerability’ of not having a degree of control and merely provide a ‘bulletin board’ for individuals to advertise their services (e.g. AirTasker), ostensibly allowing contractors to engage directly with their customers, it is likely that those individuals will not be found to be employees.
The Uber Decision should not necessarily be seen as an attack on the Gig Economy or the ability for individuals to offer their skills and services on a freelance and ad-hoc basis, but is a lesson for companies that exercise some form of control over these individuals through the use of booking apps and other technologies. Over the last decade, the employment landscape has changed significantly, and countless entrepreneurial companies have emerged that rely on technology to connect with freelance workers to provide an entire range of products and services.
Whilst Uber has been a highly successful model since its inception, companies that provide services through the Gig Economy, need to exercise caution not to mandate excessive control to the point that a Court would find that engagements are not lawfully characterised. This may be somewhat challenging in circumstances where they also need to implement appropriate measures to ensure that their engagements do not damage their brand. We are available to assist Gig Economy companies that may wish to discuss their potential exposure following the landmark Uber Decision and/or the implementation of appropriate measures to limit potential liability. If any further information in relation to any aspect of this alert is required, please do not hesitate to contact us. Otherwise, we are available and ready to assist should you require any other employment law advice or assistance.
This alert is not intended to constitute, and should not be treated as, legal advice.