Employment and Migration Blog

FWC rules Uber not an employer in Australia…Yet.

Posted by Stephen Booth on 29 Jan 2018

Assisted by Freya Booth

The tension between traditional employment law frameworks and the gig economy has come to the fore once again after the Fair Work Commission holds that an Uber driver is not an employee.

Traditional employment v the ‘gig’ economy

The ‘gig’ economy refers to the increasing use of short-term contracts and ad hoc engagements as a form of organising work - including digital platforms such as Uber, Deliveroo, Airtasker and Airbnb.
These digital platforms allow individuals to draw on otherwise unused assets, skills or services and provide them directly to others, organised through apps and other digital tools.

The short-term, flexible and ad hoc nature of gig economy work appeals to, or provides opportunities for, many people.  However, these informal arrangements don’t sit easily with traditional ideas of employment, which are based on providing certainty and minimum protections, even for casual employees.  The gig economy is a new and large field in which the difference between employment and independent contracting, and disputes about which of these applies in a given case, can play out.  This is an issue which has had some attention in the UK, but no direct FWC authority in Australia.

Background: the UK position

In 2016, the UK Employment Tribunal agreed with two Uber drivers, who successfully claimed they should be classified as ‘workers’ because Uber retained control over their working conditions.  The Tribunal found the two drivers were entitled to basic employment protections that accompany an employer-worker relationship, including minimum wages, breaks and paid leave.

Uber’s appeal against this decision was dismissed in 2017, but Uber has appealed again, so the UK Supreme Court may have the final word on this matter later this year.

On the other hand, a November 2017 decision of the UK Central Arbitration Committee found that Deliveroo riders are not ‘workers’ because they have a right to ask another rider to perform a job for them, so they were considered self-employed, and not eligible for employment entitlements.

The Uber case in Australia

The FWC has now had the opportunity to rule on this issue in the case of Kaseris v Rasier Pacific (December 2017, Gostencnik DP).

The FWC rejected a Victorian Uber driver’s claim of unfair dismissal.  Uber had terminated the driver’s service agreement due to poor passenger ratings.

Gostencnik DP found that the driver failed to establish that he was an employee of Uber.  He agreed with Uber’s argument that there was no ‘wages-work bargain’ (under which one side was obliged to perform work and the other to pay for it) and concluded that no employment relationship existed.  Therefore, the driver was ineligible to claim unfair dismissal.

The driver was found to be an independent contractor because he had a high degree of control over his hours of work, and could choose when to turn on (or not turn on) the app, and therefore take up the jobs offered.  He was free to work on other digital platforms, could charge less than Uber’s recommended fare, used his own car and smartphone to perform the service and was registered for GST, all pointers to being a contractor, not an employee.  Gostencnik DP held that Uber acted as a lead generator, payment collection agent and technology provider.  He was not persuaded by the UK Tribunal’s approach to Uber, as it was dealing with the definition of ‘worker’, which is broader than the concept of an employee, and includes some independent contractors.

He did acknowledge that traditional employment law frameworks may not be applicable in current economic circumstances.  Gostencnik DP noted that it may be that the “notion that the work-wages bargain is the minimum mutual obligation necessary for an employment relationship to exist” is “outmoded” and that current laws “take little or no account of revenue generation and revenue sharing as between participants, relative bargaining power, or the extent to which parties are captive of each other, in the sense of possessing realistic alternative pursuits or engaging in competition”.  However, the traditional tests must still be applied, as well as possible, unless legislation changes the rules.  

Subject to any appeal, or a different decision by a Full bench of the FWC, this decision is a strong indicator that gig economy workers will have difficulty in obtaining employment entitlements, and the case is also interesting on the perennial issue of distinguishing contractors from employees.

If you have any questions regarding independent contractors or other employment relationships, contact our Employment Law team.