Tuesday, 23 January 2018

The Gig Is Up: Key Decision For The Future Of The Gig-Economy

Whether workers in the gig economy – decentralised, task-driven work, arranged by companies like Uber – are employees or independent contractors was previously unconfirmed.

However, in a recent case, an Uber driver made an application with the Fair Work Commission (FWC) alleging that he was unfairly dismissed. This forced the FWC to make a jurisdictional decision as to whether the driver was an employee or an independent contractor.

Contractor or Employee Decision

In its decision, the FWC looked at the totality of the driver’s engagement, giving weight to the following factors:

Factor Considerations
Control Drivers maintained control of when and where they worked and were able to accept or reject work as desired.
Equipment Drivers provide their own vehicles.
Uniform Drivers were forbidden to wear any sort of uniform or display Uber imagery.
Tax Drivers are required to register for GST and remit all tax liability
Payment Structure Drivers pay Uber a service fee, rather than being paid for their time.
Employment Entitlements Drivers are not paid any leave or superannuation.
Contract Drivers sign an independent contractor agreement

 

Based on this, the FWC found that the Uber driver in question was an independent contractor.

For employers with similar engagement strategies, this decision may mean that their primary workforce is almost entirely comprised of genuine independent contractors. Unless successfully appealed/overturned, this decision may be relied upon and referred to, if workers in other sectors of the gig-economy seek the benefits of an employer-employee relationship.

What Does This Mean For Employers?

It is important for companies to consider the appropriate engagement model to implement and to provide legally compliant contracts to its employees and contractors.

Based on this decision workers throughout the gig economy may well be considered legitimate independent contractors until proven otherwise. This gives greater flexibility and lower cost obligations to employers. On the flip side, this type of engagement model comes at the cost of a liquid workforce without the loyalty that long-term employment usually engenders.

To determine whether a worker is an employee or a contractor, businesses should consider the outcome of this case. However, the assessment ultimately must be made with reference to the specific relationship, and businesses still need to apply the multi-factor test, as the FWC did in this case, before reaching a final conclusion.

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.


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