If you're ever stuck for conversation with your taxi driver,
simply ask them how they feel about Uber and I'm sure
you'll start up a lively one. Protests by taxi drivers in
Melbourne earlier this month indicate that the tensions between
Uber and taxi drivers are certainly heating up.
We've all heard of Uber – a taxi-like booking service
that's (according to some) more convenient than an actual taxi
booking service. You type in where you want to go, the Uber app
tells you where the nearest Uber driver is, you hop in, and away
you go. The fare is often cheaper than a taxi (though as fares are
demand-driven, they can be eye-watering at peak times) but have you
ever wondered how they keep their general costs so low?
Four Uber drivers in California are running a class action,
arguing that they were not truly "contractors", as
Uber's arrangements with them appear to be, but were in fact
employees of Uber and should therefore have been remunerated as
employees - which would have included payment of expenses related
to vehicle maintenance, such as petrol and repairs.
In Australia, of course, the distinction between employment and
contracting has significant consequences for entitlements to paid
annual, sick and long service leave; award conditions; and
superannuation. Contracting may enable greater flexibility and
reduce on-costs, therefore making the contracted business highly
Is this perhaps the way Uber has become so strikingly
competitive in such a short period of time?
The Fair Work Act prohibits "sham contracting" –
a superficial arrangement where the employer misrepresents to its
workers that they are contractors and not employees. This raises
the issue of how you identify genuine contracting from an
Determining whether a particular individual is a contractor or
employee is notoriously difficult. The legal analysis depends on a
variety of factors, such as whether the "employer" has
actual control over the worker and the way in which they perform
their tasks, whether the worker is his or her own boss or
"really" works for the business to which they're
providing services, whether the worker has the freedom to contract
their services to others, and whether the worker supplies their own
equipment and uniform. It's often far from clear what factors
the courts will place more emphasis on in any given scenario.
If you don't get the legal relationship right, and if you
are in fact engaging in a sham contracting arrangement (whether
this was your intention or not), there are penalties to be paid
under the Fair Work Act, not to mention the claims for unpaid
employee entitlements that you may receive from your workers.
The Californian case is yet to be decided. It will be
interesting to see, as the struggle between old-economy taxis and
new-economy Uber heats up, whether the sham contracting angle is
taken up by the Fair Work Ombudsman or by disgruntled Uber drivers
If you're unsure of whether your workers are contractors or
employees, you should contact our Employment Law Team to discuss
the true legal nature of your working arrangement, and steps to
protect your interests against the risks of an argument over
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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An employee that refused a reasonable offer of settlement was ordered by the FWC to pay his ex-employer's legal costs.
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