Australia: Absence of work-wages bargain crucial for Fair Work Commission to conclude that an Uber driver was not an employee

The Fair Work Commission (FWC) recently handed down a decision1 which concluded that an Uber driver was not an employee for the purposes of the Fair Work Act 2009 (Cth) (FW Act), but an independent contractor, meaning that his unfair dismissal application was dismissed.

The decision, the first of its kind in Australia, only increases the tension between the rise of the gig economy and the traditional indicia courts use to determine the presence of an employment relationship.

Background

An Uber driver filed an application before the FWC for an unfair dismissal remedy under s 394 of the FW Act. The application was made after Uber terminated the driver's service agreement following poor client ratings.

The driver argued he was an employee because he could only charge passengers with Uber approved fares. The driver also requested the FWC to consider a 2016 United Kingdom decision2 which found another Uber driver to be a "worker" (UK Decision).

Uber argued the application should be dismissed, since the driver was engaged as an independent contractor.

The FWC's reasoning

The FWC concluded that the fundamental elements of an employment relationship were not present, stating that a contract of employment is a work-wages bargain3, which requires a correlative obligation between the contracting parties, whereby the employee, on one side, performs the work required by the contract, and the employer, on the other side, pays for the work performed.

The driver was not required to perform any work for Uber; instead, he was free to "perform as much or as little work with it as he liked" 4 "without any further reference to [Uber]" 5. Also, Uber did not pay for any work performed by the driver. In its place, the driver received a percentage of the fees charged to passengers for the trips.

The FWC also established that the UK Decision was of no help, because it was decided on the basis of an expanded definition of worker, which is broader than the definition of worker under Australian laws.

Independent contractor versus employee

The FWC assessed the following indicia to distinguish between employees and independent contractors:

  • Control – the driver had complete control over the way he wanted to provide his riding services.
  • Equipment – the driver was required to provide his own vehicle, smart phone and wireless data plan.
  • Uniform – the driver was not required to wear a uniform.
  • Goods and Services Tax – the driver was required to maintain his taxation obligations.
  • Description of relationship – although not decisive, the services agreement stated that the driver was not an employee.
  • Exclusivity – the driver was not required to provide services only to Uber riders.

The FWC noted that consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture of the relationship from the accumulation of detail. The overall effect can only be assessed by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. The ultimate question is whether the worker is the servant of another in that other's business, or whether the worker carries on a trade or business of his or her own.

Key lessons for employers

  • Until new legislative or common law developments are in place, the traditional indicia used by courts/tribunals to determine the existence of employment contracts will continue to be used in assessing the relationship of persons engaged in the gig economy.
  • Other potential gig economy cases will be analysed on their own facts by reference to the ultimate question of whether the purported contractor is carrying out a business of their own.

Additional note – Uber's submission to a Senate inquiry into the future of work

In its recent submission6, Uber argued that workplace laws prevent them from providing incentives and benefits to its drivers because of the fear they will be misclassified as employees. Uber thinks companies should be "incentivised, not penalised, for helping independent workers access training, as well as other perks and benefits".

Footnotes

1 Mr Michail Kaseris v Rasier Pacific V.O.F [2017] FWC 6610.

2 Aslam and others v Uber B.V. and others [2017] IRLR 4 (ET).

3 Mr Michail Kaseris v Rasier Pacific V.O.F [2017] FWC 6610 [48].

4 Ibid [51].

5 Idem.

6 https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Future_of_Work_and_Workers/FutureofWork/Submissions.

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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