Thursday, 20 May 2021

Fair Work finds Deliveroo rider to be an employee: What does this mean for the gig economy?

The Fair Work Commission in an unfair dismissal case has found a Deliveroo driver thought to be a contractor to be an employee. This highlighting the ongoing uncertainty of the future of the gig economy.

The expansion of the ‘gig economy’ in the last few years has created huge opportunities for both digital platform providers, as well as individuals seeking autonomy in when and how they work.

Deliveroo (and most other gig platform providers) assert that they engage contractors to provide their services. As these individual contractors are not employees, they are not entitled to ‘employee’ entitlements such as annual leave or personal leave – or access to the unfair dismissal jurisdiction found in the Fair Work Act.

In this latest case, a Deliveroo rider made an unfair dismissal application following the termination of his contract by Deliveroo. Deliveroo argued that it terminated the rider in accordance with the contractor agreement, on the basis that the rider’s food deliveries were slower than his counterparts.

Deliveroo objected to the unfair dismissal application, on the basis that the rider was a contractor and was barred from the jurisdiction as it was only available to ‘employees’.

Before considering the merits of the case, the Commission had to determine the status of the rider’s engagement – was he a contractor or employee? The analysis was based on long standing common law criteria such as the following (non-exhaustive) factors:

  • The degree of control over the work performed
  • The choosing of the hours of work
  • The ability to work for others

Essentially, the Commissioner found in favour of the rider, on the basis that:

  • Deliveroo had ‘the capacity’ to exercise significant level of control over the riders – even if, at the time of terminating the engagement, it did not exercise such control. Deliveroo had the ability to introduce systems (as it had used in the past) which could utilise rider performance metrics. The ability to introduce such systems, was, in the Commissioner’s view, indicative of control;
  • Further, as Deliveroo had “an extraordinarily vast repository of data relating to the performance and activities” of the riders, Deliveroo could use such data to ‘control’ the riders and this “control can be switched on and off as business needs and circumstances might have Deliveroo determine”. Essentially, utilising (or the ability to utilise) data to assess performance was indicative that Deliveroo had control over the engagement; and
  • The rider had no capacity to negotiate any terms of the contract, indicating an inequity of bargaining power.

Further, while the rider in the case also provided services for Deliveroo competitors UberEats and DoorDash, and at times provided services to all 3 providers at the same time – the Commissioner considered that ‘multi-apping’ “is an example of the phenomenon of change that new technology is bringing to the traditional arrangements for employment”. As such, an individual could work simultaneously for two or more employers because physical presence was “no longer a fundamental requirement for the work to be performed”.

The Commissioner considered that while it appeared that the rider had the ability to choose when he would work, the system used by Deliveroo for the majority of his engagement created a necessity to be available at particular times and regularly available for work – otherwise he would lose preferential treatment.

After considering some further factors the Commissioner, made the “compelling conclusion” that the rider was an employee – he was unfairly dismissed – and considering the method of termination was by email was “unnecessarily harsh”.

What does this mean moving forward?

This is not the first time operators in the gig economy have faced decisions of these types. Foodora in Australia went into voluntary administration around the same time the Fair Work Commission made a similar finding about a rider in November 2018. Uber have settled individual matters rather than waiting for courts to decide.

Menulog has indicated it will transition its riders to employees.

So where does this leave Deliveroo?  Unsurprisingly Deliveroo has indicated that it will appeal this latest decision – and if they lose I expect they will keep appealing given the impact this decision would have on their business.

However, relying on individual decisions is not the solution. Ideally the Federal Government is best placed to create certainty amongst digital platform providers, the gig economy workers and the public. After all there are tens of thousands of workers in the gig economy who consider themselves contractors – and don’t want to be employees.

While there are talks of creating a new Modern Award to address this emerging economy, adhering to any Award essentially forces parties into an ‘employee/employer’ relationship – losing the freedoms which both parties enjoy.

Some alternatives that protect the contractor arrangement could include requirements that platforms be structured in a way that gig workers are able to earn at least the equivalent of minimum hourly rate of pay.

Also in the same way that superannuation legislation deems that certain independent contractors (where the contract is for labour) to be entitled to superannuation, workers in the gig economy (who are sole traders) could be deemed employees for purposes of Workers Compensation and other safety net protections.

Other legislation in states also contain protections for contractors. For example in Victoria the Owner Drivers legislation that has been in place since 2005 gives owners drivers certain rights such as minimum notice period for termination, and protections against unconscionable conduct.

There are many other examples across jurisdictions that could be used as a model to address these issues. State and Federal Governments do not need to reinvent the wheel. By providing some basic legislative protections where riders are afforded some protections around being able to earn a minimum rate, being compensated if they are injured, and given access to low cost remedies if they are treated unfairly or unconscionable, the freedoms associated with this largely beneficial contractor model could be maintained.


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.