There has been ongoing debate about workers in the gig economy and their status as either employees or independent contractors. Claiming employment status is a way for workers, particularly those who have been dismissed, to claim paid leave entitlements and protection from unfair dismissal.

In April 2020, a Deliveroo driver was told that his supplier agreement would be terminated due to his alleged slow delivery times. The driver brought an unfair dismissal claim in the Fair Work Commission ("FWC") that he was an employee and was entitled to protection from unfair dismissal. The FWC agreed that the driver was an employee, found he had been unfairly dismissed and ordered reinstatement (read our article about the decision here).

Deliveroo appealed the decision, but the case was stayed pending the High Court of Australia's ("HCA") decisions regarding employment status in Construction, Forestry, Maritime, Mining and Energy Union & Anor v Personnel Contracting Pty Ltd and ZG Operations & Anor v Jamsek & Ors. Overturning the existing legal position, the HCA found that where there is a valid contract, it is the terms of the contract, and not how the relationship operates in practice, which will determine whether a worker is an employee or an independent contractor (read our article about the decisions here).

Following the decisions of the HCA, the Full Bench of the FWC ("FWCFB") listed the Deliveroo appeal for a further hearing and handed down its decision in August 2022. The decision, which has far-reaching consequences for gig economy workers, found that the Deliveroo driver was not an employee and could not claim unfair dismissal.

The Decision of the Full Bench

In forming its decision that the driver was an independent contractor and not an employee, the FWCFB examined the terms of the supplier agreement. The FWCFB found that there were several elements in the supplier agreement which supported the driver being an independent contractor. These were:

  • Deliveroo had a lack of control over the manner of work performed by the driver;
  • the driver needed to provide the delivery vehicle at his own expense;
  • the driver could freely delegate his work; and
  • the driver had to pay an administrative fee of 4 per cent of the total fees payable to him for access to Deliveroo's software and for Deliveroo providing invoices.

Factors Not Considered

Despite finding that the driver was not an employee, the FWCFB said that, in reality, Deliveroo did indeed exercise a degree of control over the driver's performance of the work. However, due to the decisions of the HCA earlier this year, the FWC was quite literally required to "close its eyes" and could not consider how the relationship operated in practice.

The FWCFB was unable to consider:

  • the practical operation of Deliveroo's self-service booking tool, which provided Deliveroo with a significant degree of operational control over its delivery workers;
  • the motorcycle used by the driver cost around $1,500, and therefore while the driver provided his own equipment it was not a substantial capital outlay;
  • the driver presented himself to customers as an emanation of the Deliveroo business by using a branded bag, polo shirt, rain jacket and rain pants, in return for a bond of $220;
  • the general rule was that the driver was personally expected to provide services under the contract; and
  • the contracts were drafted by Deliveroo without any negotiation or consultation with the driver, and many changes to the contracts were apparently intended to remove any indication that Deliveroo could control the performance of the work, despite the practicality of the arrangement.

Additional Comments by the Full Bench of the Fair Work Commission

While Deliveroo succeeded in its appeal, it was not immune to criticism by the FWCFB. In its conclusion, the FWCFB noted that the driver was "regrettably" left with no remedy from the FWC, for what was "plainly . unfair treatment" by Deliveroo. The FWCFB also made it clear that the reason for its decision solely lay in the HCA authorities, which it was required to follow.

Key Takeaways

The decisions of the HCA and FWCFB will protect organisations from scrutiny, provided the language and structure of their contractual agreements reflect an independent contractor arrangement. Considering the ever-changing nature of this area of law, organisations should be vigilant that their contracts and agreements are valid and accurately reflect the nature of the intended relationship.

Organisations should also expect further changes in the gig economy space as the Government has signalled that it plans to give the FWC powers to rule on "employee-like" forms of employment and work, including gig economy workers.