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Published: 29 January 2019
Author: Annie Kent

Gig economy in the dock over workers' rights

Gig economy giants such as Uber have dubiously maintained that their workers are “independent contractors” rather than employees, allowing them to avoid providing benefits to workers such as workers compensation for work-related injuries, and superannuation.

But a breakthrough ruling by the Fair Work Commission late last year, along with the announcement by the Victorian Government of an inquiry into the gig economy, could signal that firms such as Uber and Deliveroo may finally be forced to take responsibility for the welfare of their workers.

In this blog, I look at how the gig economy industry deprives workers of legitimate rights and protections, and what could be done about it legally.

Employee or not?

In November 2018, Commissioner Cambridge from the Fair Work Commission (“FWC”) in the case of Klooger v Foodora Australia Pty Ltd [2018] FWC 6836 (“Klooger”) found that a former rider for Foodora, Josh Klooger, was an employee of the online company and had been unfairly dismissed.

Commissioner Cambridge found that termination of Klooger’s employment was harsh, unjust and unreasonable and therefore ordered Foodora to pay Mr Klooger $15,559 in compensation.

This was the first time that an Australian tribunal or court had ruled that a digital platform worker was an employee, rather than an independent contractor.

Prior to Klooger, the FWC previously dismissed two unfair dismissal claims against Uber on the bases that, broadly, workers were found to be independent contractors and therefore not entitled to protection from dismissal.

There are a number of factors that a tribunal, such as the FWC, or a court would consider when determining if a worker is an employee or an independent contractor.

Generally, these include:

  • Who has control over how a worker performs work – e.g. hours and location;
  • Who a worker performs work for i.e. one employer or is free to work for a number of employers;
  • Who is responsible for advertising of goods and services provided by a worker;
  • Who provides equipment so that a worker can perform their duties;
  • Who provides business cards or uniforms;
  • Who pays for business expenses;
  • Does the worker operate their own business or really, is a representative of another organisation’s business.

While the above considerations are helpful, the facts of every case must be examined in isolation. In some circumstances, not all considerations will apply with equal weight. A court or tribunal may find that some factors are more important or relevant to the facts. Therefore, whether or not someone in the gig economy is an employee rather than an independent contractor is determined by looking at the facts of each case.

For example, the FWC found that Klooger was an employee as he had worked according to fixed start and finish times and in designated locations. Klooger was required to wear Foodora attire while working. Klooger’s terms of engagement with Foodora required him to comply with Foodora’s policies, where workers could swap shifts with others, and Klooger did not personally advertise his services to the world.

How employees are left at risk

The claim made by gig economy firms that their staff are really “independent contractors” rather than employees, allows them to avoid provisioning for basic employment protections such as workers compensation for work-related injuries, and superannuation.

This means that people who are injured at work in these types of work arrangements might be left to personally cover their medical expenses.

In addition, they would generally have no entitlement to superannuation payments upon ceasing work, or access to paid annual leave and sick leave.

Under the Fair Work Act 2009 (Cth) (“the Fair Work Act”), employees are generally entitled to protection from unfair dismissal and entitlements to the minimum wage, overtime and in the case of permanent employees, annual leave.

By effectively transferring the risk of employment to their employees, gig economy firms have been able to dodge their legal responsibilities and leave their workforces dangerously exposed.

It was for this reason that in 2018, the Victorian Government announced it would conduct an Inquiry into the on-demand workforce.

The Inquiry, chaired by former Fair Work Ombudsman, Natalie James, will examine how the on-demand sector functions and the status of people working with or for online companies or platforms in Victoria.

The establishment of the Inquiry follows ongoing concern about underpayment of wages and conditions within gig economy firms, which include lack of paid annual leave, and lack of protection from unfair dismissals. The Inquiry will examine allegations and determinations concerning contracting arrangements.

Notably, at issue will be whether companies are using these arrangements to avoid workplace laws and other statutory obligations in Victoria.

Where to now?

It is clear that reforms to the federal legislation governing employment within Australia, the Fair Work Act, are needed.

The legal meaning of “employee” should be broadened to include people who work within the gig economy. Failure to do so could continue to deprive workers of entitlements to superannuation and work-related injury compensation, for example.

Additionally, companies and businesses with an online marketplace presence may review their business models including how they interact and control work they provide.

The Victorian Trades Hall Council (“VTHC”) is seeking workers in the gig economy to share their experiences. The findings will be used to support the VTHC’s submission to the Victorian Government’s Inquiry. The broader aim of the Inquiry and various Unions is to ensure that workers are protected in the new economy.

The Victorian Government’s Inquiry will consider and report to the Minister for Industrial Relations sometime this year.

Ryan Carlisle Thomas will continue to monitor developments.