Swerving this Way and that: Defining Employees in an Agile Gig Economy

While the term “gig economy” in its current form only really began to take off in the 90s along with the digital era, the notion goes all the way back to the jazz musicians who coined the term for their performances. Now, with about 2.3 million casually employed in the month of August 2020 according to the ABS in its latest report on the characteristics of employment in Australia, the gig economy and the casualisation of the work force is well and truly entrenched in society.

The ABS did note that the number of casual employees dropped as the pandemic started to accelerate and the lockdowns began to bite and although this called attention to the economic issues surrounding insecure work, it was the deaths of delivery riders that shone a light on the darker side of gig work.

Legal Insight speaks to Mark Rinaldi, Barrister and General Editor of Fair Work Legislation and National Workplace Relations to understand the concerns surrounding gig work, the definition of employment and the notion of control.

Significance and impact of cases such as Franco v Deliveroo

Franco v Deliveroo Australia Pty Ltd (2021) 305 IR 255; [2021] FWC 2818 and Klooger v Foodora Australia Pty Ltd (2018) 283 IR 168; [2018] FWC 6836 are just two in a series of recent cases where gig economy workers have sought to bring claims for unfair dismissal remedies. Mark suggests that these cases are extremely significant in that it was held in both cases that the applicant was an employee and thus able to sue for unfair dismissal. He believes that these would encourage other workers, engaged by rideshare and on demand services, “to claim unfair dismissal if they have been dismissed, claiming that they were employees, not contractors.” He does, however, advise caution as Gupta v Portier Pacific Pty Ltd (2020) 296 IR 246; [2020] FWCFB 1698 was a Fair Work Commission Full Bench decision to hold the opposite view, that the applicant (an Uber Eats delivery partner) was not an employee. This followed a string of cases in the Commission in which Uber drivers were held not to be employees.

It has been posited that the seemingly contradictory decisions have turned on the differences in the contracts and operational models of the three companies, but Mark notes that Portier Pacific Pty Ltd (trading as Uber Eats) did eventually settle its case prior to the judgment of the Full Federal Court as comments by the judges at the review hearing indicated that they were questioning the correctness of the Full Bench decision.

Legal definitions of “employee” and “employment”

Of importance for practitioners to note will be the fact that none of the cases have changed the legal definitions of “employee” and “employment”.

“The ‘ordinary definition’, as it is referred to in the Fair Work Act 2009, at common law has not changed nor has the definition of a ‘National System Employee’ as also defined in that Act.”

– Mark Rinaldi, Barrister and General Editor of Fair Work Legislation and National Workplace Relations

What is clear, though, is that the conflicting judgments will have considerable impact on whether workers “can bring claims such as unfair dismissal claims and seek employment benefits such as award wages and leave entitlements.”

Mark acknowledges that the case law regarding the question of whether a worker is an employee or not is at best inconsistent, and at worst incoherent, likening the varying decisions of courts and tribunals to the (sometimes unavoidable) riding or driving patterns of gig economy workers. He speculates that the answer to that question may be influenced by the reason for asking the question.

Common Law, the notion of control and the gig economy

The Fair Work Act 2009 looks to the common law to determine the existence of an employment relationship. However, the common law currently applies a multi-factorial test which involves the balancing of a number of factors which indicate for or against an employment relationship. This presents a substantial challenge as there is never a certain answer.

The notion of control, or more precisely the right to control, was traditionally the primary indicator of employment, but Mark is cautious of relying solely on the control test as it derived from old master and servant law and proved unreliable in cases where highly skilled workers were expected to exercise independent judgment in their work.

“The engagement of highly skilled employees who were expected to work out for themselves the most efficient manner of performing work, made a nonsense of a distinction based on the difference between the employee, who was told how to work, and the independent contractor, who was commissioned to produce a result.”

– Mark Rinaldi, Barrister and General Editor of Fair Work Legislation and National Workplace Relations

He stresses that, although the control test is perhaps still the most important, there are multiple factors that courts look at to determine whether, having regard to all the facts and the totality of the relationship in practice, a relationship of employment exists. Alluding to several alternative tests such as the “organisation” or “integration” test and the “economic reality” test, he points out that while these alternative tests “have not been adopted in Australian case law, some of their elements are apparent in the ‘multiple indicia’ approach adopted by Australian courts.”

Mark further observes that the test for an employment relationship is a matter of impression and “different judges will have different impressions and accord differing weight to different factors pointing in different directions”, highlighting the fact that Franco and Klooger were decided by the same Commissioner. Clearly, relying exclusively on the common law to determine the existence of an employment relationship can be challenging and will make it difficult to advise business owners and workers, or to predict the outcome of cases.

What government can do

Considering the difficulties in mapping the boundary between employee and contractor as demonstrated by the discordant case law, Mark argues that “the time has come for the legislature to step in to address the shortcomings of the common law in this vexed area that affects so many people in our society.”

Mark called attention to the amendments the Australian Democrats had sought to introduce to the Independent Contractors Bill 2006 (Cth) which would have placed the onus on the employer to establish a genuine independent contractor relationship and made the default finding in any case that the worker is an employee.

Although the Democrats failed to push through the amendments, Mark lists several other possibilities that have been proposed including:

  1. simply legislating that workers in the gig economy are employees;
  2. reforming employment entitlements such as those set out in the National Employment Standards in the Fair Work Act 2009 to make them applicable to all workers, much like the Work Health and Safety Acts; or
  3. providing for a new class of workers (so-called “dependent contractors”) with at least basic employment-style rights (such as protection from unfair dismissal).

He also submits that, in light of the pandemic and the devastating impacts of lockdowns, the simple act of “expressly extending the availability of JobKeeper type payments to gig workers during the pandemic would also assist them.”

Change on the horizon?

As the world continues to grapple with the effects of COVID-19, it has become increasingly clear that the pandemic has simply highlighted the vulnerabilities of independent contractors both to job insecurity and exploitation. In 2020 alone, five food delivery riders were killed while on the job. There are several cases before the courts against companies such as Uber and Deliveroo for unfair dismissal and/or exploitation and underpayment. Yet, there would appear to be positive change coming.

The Federal Opposition has gone on record with promises of “a suite of reforms to improve job security and provide minimum pay and entitlements to those in insecure work” should they be elected. In Victoria, the state government has promised funding to protect gig workers, “including setting principles-based standards to provide fairer conditions for on-demand workers and ensure platforms operate transparently.” Menulog, a competitor of Deliveroo and Uber Eats, has begun its trial of adopting an employment model in the Sydney CBD, with riders provided with the minimum wage, superannuation and safety equipment.

Perhaps with time, a little fine tuning along the way and the willingness to fulfil their “moral obligation”, gig economy firms will finally be able to balance fairness and flexibility for their gig workers.

The discussion of the employment relationship continues in more depth in the subscription service National Workplace Relations as well as the new Fair Work Legislation 2021-2022 which is available for purchase as an eBook.

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