On Tuesday 18 May 2021, the Fair Work Commission (FWC) made a landmark ruling that could see delivery drivers and riders deemed to be employees and not independent contractors.
Gig economy companies such as Deliveroo, Menulog and Uber Eats have traditionally classified their drivers or riders as independent contractors and have, until this case, avoided the risk of claims that their workers are engaged as employees who have much greater protections than independent contractors.
The FWC ruled that former Deliveroo rider, Mr Diego Franco was an employee, not an independent contractor, in determining that he was unfairly dismissed for no valid reason after he was kicked off the platform for alleged lateness.
Deliveroo argued that Mr Franco was free to decide when to work and was able to use multiple delivery platforms simultaneously to generate work, which was indications that he was a contractor, not an employee and as such, he didn’t have access to the protection of unfair dismissal under the Fair Work Act. However, the FWC found that there were other facets of Mr Franco’s engagement that were indicative of an employment relationship, such as that he did not build up his own business or have a brand as a rider, that he booked his shifts through a company system, did not have a distinct trade or profession, dressed in clothing with Deliveroo branding, and did not bring his own significant assets to the business.
In delivering the finding, Commissioner Cambridge said all of the facets of Mr Franco’s arrangement with Deliveroo, taken together “like the colours from the artist’s palette, emerged to form a complete picture” and showed he was an employee.
This decision opens the door for drivers and riders in similar positions to make claims for unpaid employment entitlements, including underpayment of wages pursuant to the Road Transport and Distribution Award 2020 and unpaid annual leave or notice of termination in accordance with the Fair Work Act. It also exposes companies who engage independent contractors on a similar basis to these claims.
Whilst Deliveroo has indicated that it intends to appeal the decision unless overturned on appeal this decision is likely to significantly impact how businesses look at engaging independent contractors to ensure that the risks of their workers being deemed to be employees is reduced. This isn’t as simple as entering into an agreement that refers to the worker as an independent contractor. Courts will look at the working relationship as a whole and weigh all of the facts in determining whether, on balance, the worker is acting for another (as an employee) or on their own behalf (as an independent contractor).
If you engage independent contractors there is a risk that they may be deemed to be an employee. It is important that you review your current arrangements and obtain advice whether they support an independent contractor finding or if you are at risk of finding that they are employees. If you need advice or would like to have your contracts and working arrangements revised, please contact Matt Bell, Chris Lowe or Suzanne Wishart on 1300 068 736.
This publication has been carefully prepared, but it has been written in brief and general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.