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Australia - Uber, the Gig Economy and Legislative Change

07 February 2018
DWF
The lack of a “work–wages  bargain” with respect to the Australian operations of Uber, as analysed by the Fair Work Commission in a recent case meant that a Uber driver was not an employee. Legislative change would be required to change the law to adapt to the “Gig Economy” in order for such relationships to be seen as one of employment. 

The lack of a “work–wages  bargain” with respect to the Australian operations of Uber, as analysed by the Fair Work Commission in a recent case meant that a Uber driver was not an employee. The lack of such relationship in other IT platforms which facilitate provision of services may, at present, mean that related service providers are not employees at common law. Legislative change would be required to change the law to adapt to the “Gig Economy” in order for such relationships to be seen as one of employment. 

Fair Work Commission Uber Decision – Kaseris v Rasier Pacific V.O.F. (U2017/9452)

A driver who had his services agreement with an Uber partnership terminated because of failure to maintain an adequate overall driver rating was recently found not to be an employee when he brought an unfair dismissal application. This resulted in the application being dismissed.

The lack of a “work – wages bargain” between the Uber partnership and the driver was fatal to the driver’s case.  Deputy President Gostencnik observed that a contract of employment is essentially a “work – wages bargain” and in order to create such a contract there must be an obligation on the one side to perform the work or services under the contract and on the other side an obligation to pay for such work or services.

Here, the services agreement between the parties recorded that in return for payment of a service fee from the applicant driver to the respondent, the respondent provided lead – generation services and other ancillary services, such as payment and collection processing and customer support. The “work – wages bargain” was therefore missing.

Traditional Indicia of employment

The various indicia of employment are set out in seminal case of tevens v Brodribb Sawmilling Co Pty Ltd (1986) 63 ALR 513 and reflect the “multi-factorial approach” to distinguishing an employee from an independent contractor. The Commission found as follows regarding these indicia:

Control

This favoured an independent contractor relationship because the applicant driver had complete control over the way in which he wanted to conduct the services. For example, he was able to choose when to log in and when to log off and was generally able to accept or refuse trip requests.

Equipment

This weighed significantly in favour of an independent contractor relationship because the applicant driver had to provide his own car, as well as smart phone and wireless data plan.

Uniform

This did not support an employment relationship because the applicant driver did not and was not permitted to display any of the respondent’s names, logos or colours on his vehicle and was not required to wear any uniform connecting him to Uber.

GST

The fact of the applicant was expected to pay his own GST weighed in favour of an independent contractor relationship.

Description of Relationship

The service agreement generally classified the relationship as that of independent contractors.

UK Decision not applicable

Interestingly, the Commission found the recent United Kingdom decision of Aslam and others v Uber B.V. and others [2017] IRLR (ET) in which the Employment Tribunal found a Uber driver was a worker for the purposes of the Employment Rights Act 1996 did not assist the Applicant.  The UK legislation contained an expanded definition of “worker” which was broader than the definition of an employee.

Contracting Law and the Gig Economy

Having found that the relationship was not one of employment Deputy President Gostencnik noted that the concept of a “work – wages bargain” and the “multi factorial approach”  developed at a time before the new “gig” or “sharing” economy. The Commission went on to say:

“It may be that these notions are outmoded in some senses and are no longer reflective of our current economic circumstances. These notions 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. Perhaps the law of employment will evolve to catch pace with the evolving nature of the digital economy. Perhaps the legislature will develop laws to refine traditional notions of employment or broaden protection to participants in the digital economy. But until then, the traditional available tests of employment will continue to be applied.”

Conclusion

The common law would have to change seismically in order for a different result in circumstances similar to the Australian Uber decision and is unlikely to change any time soon in this area. The Commonwealth Government had an opportunity to legislate a test for determining whether an individual was an employee or independent contractor when the Independent Contractors Act 2006 was enacted.  It chose not to do so then.  It remains to be seen how long the Legislature will wait to enact further reform in this area. We can, however, expect Federal Labor’s Industrial Relations Policy to deal with contracting when it is released later this year.

Further Reading