The classification of workers in the gig economy continues to be debated following a Fair Work Commission decision which found a Deliveroo delivery rider was an employee, and had been unfairly dismissed. The decision serves as a further data point as Australian courts and tribunals are increasingly called upon to examine the true character of working relationships within the gig economy, and the rights and obligation of the participants within those relationships.

Background

A Deliveroo worker was dismissed in April 2020 after working for three years as a rider. Shortly before his dismissal, the worker received an email from the company indicating that his “supplier agreement” would be terminated within a week because of alleged slow delivery times. The worker alleged he was an employee, and that he had not been given an opportunity to respond to the allegations or improve his conduct before his agreement with Deliveroo was terminated.

In response to the worker’s unfair dismissal application, Deliveroo filed a jurisdictional objection, asserting the worker was an independent contractor and, therefore, not protected from unfair dismissal. The worker was represented by the Transport Workers Union (TWU).

Worker’s status

When examining the relationship between the worker and Deliveroo, the Commission noted that the terminology used in the written agreement between the parties went to great lengths to document a principal and independent contractor relationship. Despite this, the agreement was referred to by the TWU as a contract “of adhesion where the dominant party… determined the terms unilaterally”. The TWU submitted that the worker had no capacity in any real sense, to negotiate any of the terms of the agreement.

The Commission ultimately did not accept Deliveroo’s argument that the worker was an independent contractor, observing “Deliveroo’s capacity to monitor riders, analyse their performance, and then take action including the termination of their contracts, represented a capacity in practical terms, for Deliveroo to exercise a level of control that was reflective of the existence of an employment relationship”.

The Commission found that a holistic view of the arrangement between Deliveroo and the worker showed he was an employee, including given the worker booked his shifts through a company system, did not have a distinct trade or profession, and dressed in clothing with Deliveroo branding.

Importantly, the Commission’s analysis of the relationship looked behind the terms of the agreement and examined the substance of the relationship. Relevantly, the Commission observed “…although it appeared that [the worker] had the freedom to choose when and where to work, the practical reality was that the SSB system directed him to undertake work at particular times, and to regularly make himself available for work, and to not cancel booker engagements. Although Deliveroo did not require a rider to work for any particular length of time, or to even accept a delivery order once they had logged into a booked session, the economic reality of the situation would ordinarily compel a rider to undertake delivery work. After all, the objective of the entire process is to get paid.”

In an observation having potential ramifications for most gig economy companies, the Commission also formed the view that the data collected by Deliveroo placed it in a position where it could ultimately control the worker.

Specifically, the Commission observed “Work that is undertaken via computerised platform-based engagements provides the operators of those digital platforms, such as companies like Deliveroo, with an extraordinarily vast repository of data relating to the performance and activities of those individuals who perform the work. It takes little imagination to envisage that the data or metrics in the possession of a company such as Deliveroo, can be used as a means to control those who perform the work. As was the case in this instance, the control can be switched on and off as the business needs and circumstances might have Deliveroo determine.”

Unfair dismissal

Having found the worker to be an employee, the Commission went on to determine that he had been unfairly dismissed. The Commission found Deliveroo had not clearly communicated a standard for delivery times, and therefore there was not a valid reason for the worker’s dismissal.

The Commission found an absence of procedural fairness, specifically the worker was not given an opportunity to respond to, and be warned of, the allegations of unsatisfactory performance nor appropriate notice of the reason for the termination of his employment. The dismissal was harsh, unjust, and unreasonable given the circumstances.

What does this mean going forward?

Gig economy companies, including those that operate in food delivery and ride-share capacities, appear to be actively seeking to address these types of decision in their hiring practices and terms of engagement. In response to the decision, Deliveroo said it is confident that riders are engaged as independent contractors and enjoy the freedom that comes with self-employment (including deciding when to work and their ability to use multiple delivery platforms to generate work), and will appeal the decision to protect those freedoms. If the appeal fails, it may face the prospect of a wave of claims regarding minimum employee entitlements if its “independent contractors” are found to hold the worker status of employees.

Other gig economy companies have faced similar cases over the status of individuals that work for their companies, with Foodora leaving the Australian market in 2018 following a decision that a delivery rider was an employee and Uber Eats overhauling its contractual arrangements following a damaging court hearing in 2020. Menulog is trialling hiring employees under an award (the Miscellaneous Award) that pays casuals at set rates, including penalty rates on Sundays, which may lead to other gig economy companies doing the same.

This decision further places a spotlight on a central pillar of the argument by digital labour platforms that their workers are self-employed, enforced by the “freedom in decision-making” for workers to choose where, when, and how long they worked for at any given time. For the Commission, it appears this proclaimed flexibility and autonomy could not be construed to prevent the existence of an employment relationship, especially in the context of modern and rapidly changing workplaces.

Key takeaways

The classification of workers in the gig economy remains an open question and is likely to be the focus of ongoing examination by courts and tribunals. As quoted by the Commission in its decision, a further reality for many observers is that the “accumulation of case law has added weight rather than wisdom”.

Against this background, the challenge for the gig economy will be to continuously examine the substance of their day-to-day relationship with their workers, and to understand that courts and tribunals will continue to look behind the language and structure of their contractual arrangements. The Commission’s decision also appears to put gig economy companies on notice that the operation of their digital platforms, presumably including the way their algorithms assign work, will be placed under scrutiny when testing issues of control.