Australia: The changing world of work: Is flexibility the way of the future?

The changing world of work and the developing trend towards more flexible work, workers and workplaces continues to be a hot topic globally for lawyers, unions, politicians and workers alike.

In an article published earlier this year, we analysed conflicting decisions relevant to the question of whether gig economy workers are 'independent contractors' excluded from certain legislative protections, or 'employees' entitled to minimum wages, paid leave and the benefits and entitlements of employment.

We now take a further look at the latest decisions and policy developments in the developing trend towards more flexible work, workers and workplaces.

AUSTRALIAN DEVELOPMENTS

Uber

In our earlier article, we examined the case of Kaseris v Rasier Pacific V.O.F [2017] FWC 6610 (Kaseris), where the Fair Work Commission (FWC) rejected a Victorian Uber driver's argument that he was an 'employee' protected by unfair dismissal laws under the Fair Work Act 2009 (FW Act).

In the recent case of Pallage v Raiser Pacific Pty Ltd [2018] FWC 2579 (Pallage), Uber again successfully defended a driver's bid to claim unfair dismissal, with the FWC determining that Uber was not his employer for the purposes of the FW Act.

The Facts

The driver entered into a series of service agreements with Uber BV and its associated entity, Raiser Pacific Pty Ltd (Uber). Relevantly, those agreements included terms to the following effect:

  • the relationship between the driver and Uber was a business relationship only;
  • Uber would not be deemed to direct or control the driver generally or in his performance under the agreement;
  • the driver was not an employee of Uber or any of its affiliates; and
  • the driver indemnified Uber if he was found to be an employee of Uber.

Uber deactivated the driver on 4 December 2017 for breaching 'community standards'.

While Uber refused to disclose the nature of this breach, the driver speculated it related to two customer complaints.

THE FINDING

The FWC applied what is known as the 'multi-factorial' approach to determining whether a person is an employee or independent contractor. This involves assessing whether factors typically indicative of an employment relationship are present in any given case.1

In doing so, the FWC noted that the nature of the work and its environment (where unskilled work was performed, albeit alone, repetitively and over many engagements for the one principal) was consistent with a finding of employment.

However, the FWC concluded that 'while elements of the contract itself appear more consistent with an employment relationship (for example, those dealing with termination), most do not.'

In particular, the FWC was satisfied that (as was the case with the driver in Kaseris), this driver:

  • could choose when to log into and off from Uber's Partner App;
  • had control over the hours he worked; and
  • was able to accept or refuse trip requests.

The FWC also considered it relevant that the driver:

  • had his own Australian Business Number and was responsible for remitting GST and other tax liabilities;
  • was not required to wear a uniform;
  • provided his own equipment, most significantly in the form of a motor vehicle;
  • was permitted to work for others; and
  • was remunerated irregularly.

Ultimately, these factors indicated that the relationship was not one of employment.

FOODORA

On 12 June 2018, the Fair Work Ombudsman (FWO) commenced legal action in the Federal Court against Foodora Australia Pty Ltd (Foodora), a food delivery company.

The FWO alleges that Foodora engaged in sham contracting resulting in underpayments to three bicycle couriers it engaged in 2015. The FWO further alleges that, during 2016, Foodora misrepresented to those workers that they were independent contractors when they were in fact employees of Foodora.

A sham contracting arrangement exists when an employer attempts to disguise an employment relationship as an independent contracting arrangement. This is often done to avoid responsibility for employee entitlements.

Under the sham contracting provisions of the FW Act, an employer must not:

  • misrepresent an employment relationship or a proposed employment relationship as an independent contractor arrangement;
  • dismiss or threaten to dismiss an employee in order to engage them as an independent contractor; or
  • make a knowingly false statement to persuade or influence an employee to become an independent contractor.

The FW Act provides significant penalties for contraventions of these provisions.

The test for employment applied is this context is the same multi-factorial test referred to above.

Applying this test, the FWO alleges the three workers were actually employees of Foodora during the relevant period, having regard to:2

  • the level of control, supervision and direction Foodora exercised over the workers' hours, location and manner of work;
  • the requirement for the workers to wear a Foodora-branded T-shirt and use food storage boxes and/or bike racks supplied by Foodora;
  • the workers' payment at fixed hourly rates and/or amounts per delivery in circumstances where the workers did not negotiate their rates of pay at any time; and
  • the absence of evidence that the workers were genuinely conducting their own delivery business, and in particular, the fact that the workers did not:
    • advertise or promote their availability to perform deliveries to the public;
    • delegate their delivery duties with Foodora to any other person; or
    • have their own customer base, business premises or insurance.

Foodora faces penalties of up to $54,000 per contravention if found guilty.

UK DEVELOPMENTS

On 13 June 2018, the UK Supreme Court (Court) handed down the appeal case of Pimlico Plumbers Ltd and another v Smith [2018] UKSC 29. Mr Smith was a plumbing and heat engineer who performed work for Plimco Plumbers Ltd (Pimlico) between August 2005 and April 2011, under two written agreements.

In August 2011, Mr Smith commenced proceedings against Pimlico and its owner in an employment tribunal for unfair dismissal, discrimination, unpaid annual leave and unlawful deduction of wages.

The tribunal held that Mr Smith was a 'worker' and not an 'employee' or 'independent contractor' for the purpose of the Employment Rights Act 1996 (UK) (ER Act). Mr Smith was therefore entitled to the minimum wage and holiday pay.

Pimlico Plumbers appealed this decision. The appeal turned on whether, under section 230(3) of the ER Act:

  • Mr Smith had undertaken to perform personally any work or services for Pimlico; and
  • Pimlico was not a client or customer of Mr Smith.

The Court found that:

  1. The tribunal was entitled to conclude that Mr Smith had undertaken to 'personally perform' work for Pimlico. While Mr Smith had the right to substitute others to do his work, his only right of substitution was of another Pimlico operative. The drafting of the relevant agreements between Pimlico and Mr Smith (which used phrases like 'you' and 'your' to address Mr Smith) contemplated performance by Mr Smith personally, suggesting that Mr Smith's right of substitution was only 'insignificant'.
  2. The tribunal was entitled to conclude that Pimlico was not a client or customer of Mr Smith. Pimlico exercised tight control over Mr Smith (evidenced by the requirement that he wear Pimlico uniforms, drive its branded van, carry its ID card and closely follow administrative instructions). In addition, there were 'severe terms' as to when and how much Pimlico was obliged to pay Mr Smith, which was inconsistent with him being an independent contractor.

In reaching this conclusion, the Court emphasised that it was merely finding that the tribunal was entitled to reach its decision. A number of passages in the judgment suggest that the Court was persuaded by the counter arguments presented by Pimlico.

The concept of 'worker' under the ER Act (somewhere between an 'employee' and 'independent contractor') is not a concept in Australian employment law.

However, it has consistently been applied by UK Courts to give gig economy employees some minimum entitlements, without enlivening an 'employment' relationship. For instance, the decision in Pimlico is consistent with the finding in Uber B.V. and others v Aslam and others (Appeal No UKEAT 0056/17/DA) (discussed in our previous article).

UNION MOVEMENT

Businesses, aided by technological innovation, have increased the prevalence of flexible work arrangements once considered atypical.

The Australia Institute's Centre for Future Work recently released a report which found that, '...for the first time in recorded statistics, less than half of employed Australians work in a permanent full-time paid job with leave entitlements.'3

In classifying 'insecure work', the report includes not only casual workers, but those on contracts in the 'gig economy' (such as Uber divers) and those employed by labour hire organisations.

The Australian Council of Trade Unions (ACTU), led by Sally McManus, has harnessed this report as a basis for arguing that big business has too much power and it is time to '#changetherules'. The ultimate call to arms is for proactive policy intervention to overhaul workplace rules limiting the use of casual employees and legislating for casual conversion to permanent employment.

The Greens have endorsed the ACTU's '#change the rules' campaign.

LOOKING FORWARD - LEGISLATIVE CHANGE

In June 2018, three bills were presented and read for a first time in the Australian parliament. These were:

These Bills, which will fail without crossbench or Labor party support, provide for all workers to be entitled to minimum standards set by the FWC. Ultimately, they aim to extend protections under the FW Act to 'insecure workers', including contractors.

The Senate Select Committee of the Future of Work and Workers was due to provide its report this month, however that date for that report has been extended until 15 August 2018.

In this evolving economy, it is important for employers to balance opportunity and innovation with risk. Further, until such time as there is legislative change, they should also ensure that workers who are engaged as independent contractors are appropriately classified as such.

Footnotes

1See Hollis v Vabu Pty Ltd T/A Crisis Couriers (2001) 2017 CLR 1.

2 Fair Work Ombudsman commences legal action against Foodora, Fair Work Ombudsman (12 June 2018), accessible: https://www.fairwork.gov.au/about-us/news-and-media-releases/2018-media-releases/june-2018/20180612-foodora-litigation

3 See https://d3n8a8pro7vhmx.cloudfront.net/theausinstitute/pages/2807/attachments/original/1528337971/Insecure_Work_Factbook.pdf?1528337971.

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.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions