Australia: Fair Work Commission finds Deliveroo driver is an employee

In last months Fair Work Commission (FWC) ruling of Diego France v Deliveroo¹, the FWC found that Deliveroo unfairly dismissed a long time delivery driver. This delivery driver was able to claim damages for lost wage payments. The FWC's decision that delivery drivers for food delivery companies are employees rather than independent contractors, signals a major judicial shift in the Australian gig economy, and serves as the first significant step towards federal action regulating gig workers rights.

Background

In Diego Franco v Deliveroo, Mr Franco was removed from the delivery app, Deliveroo, for failing to deliver orders in a ‘reasonable timeframe', essentially terminating his employment. Mr Franco was given seven days notice of his termination with Deliveroo. Deliveroo was the primary source of income for Mr Franco and his family of three. He had worked for the company for around 3 years.

Following his dismissal, Mr Franco filed an unfair dismissal claim against Deliveroo in the FWC and argued that he had not received an opportunity to defend himself against Deliveroo's allegations and that he had not been warned of this misconduct prior to his dismissal.

Mr Franco argued that he was an employee, and thereby able to claim compensation for unfair dismissal under the FWC Act.

The Decision

The FWC found that Deliveroo's termination of Mr Franco was “without a valid reason,” and that “the correct characterisation of the relationship between [the two parties was] that of employee and employer.” FWC's Ian Cambridge found that Deliveroo had a significant level of control over Mr Franco due to a system in place that gave certain riders preferential treatment depending on their availability and timetable, as well as their number of late cancellations.

Further, despite the argument made by Deliveroo that Mr Franco's use of his own equipment, in the form of a motorcycle and a smartphone, made him an independent contractor, Commissioner Cambridge held that his equipment was likely owned for personal use.

Following the establishment that Mr Franco was an employee, Commissioner Cambridge began evaluating the argument that he had been unfairly dismissed and decided that Deliveroo had failed to communicate with Mr Franco the expected delivery time standards clearly and effectively. Additionally, Deliveroo had failed to warn him of his unsatisfactory delivery times.

Commissioner Cambridge determined that, “the dismissal involved an entirely unjust and unreasonable process including the complete absence of any opportunity for Mr Franco to be heard before the decision to dismiss was made.”

Implications for Gig Workers and Gig Businesses

This decision has a number of significant judicial implications on the Australian food delivery and gig economy sector.

For gig economy businesses, depending on the level of control that the business has over its gig workers, these workers may be considered employees by the FWC, entitling them to compensation for unfair dismissal. Gig economy businesses need to provide workers clear warnings about their work prior to termination and these workers must be given an opportunity to defend themselves.

This decision is a first in that gig economy worker's rights are beginning to be judicially recognised.

Footnote

¹Australia Pty Ltd [2021] FWC 2818

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.