Uber and Out… Gig is Up for Digital Worker

by K&L Gates LLP
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K&L Gates LLP

On 21 December 2017, Deputy President Val Gostencnik of the Fair Work Commission issued a decision in the matter of Michail Kaseris v Rasier Pacific V.O.F., an unfair dismissal application in which the jurisdiction of the Commission to hear the matter was determined, in the circumstances that only true employees have access to the Commission to pursue claims of unfair dismissal.

No ordinary jurisdictional decision, the decision gave close consideration to the widely debated question of whether Uber drivers are genuine independent contractors or whether they should, at law, be deemed employees.

Factors Affecting the Decision

The question of whether a particular worker is a genuine independent contractor or an employee is not straightforward—there is no single factor that will be determinative in any case. This question is ultimately determined by taking a multi-factoral approach to make an assessment of whether a relationship is reflective of a business-to-business relationship, or a "master-servant" relationship, in which there is "wages-work" bargain pursuant to which work or services may reasonably be demanded with a corresponding obligation to provide payment for that work.

The decision provides a useful elucidation of the factors to which all employers must have regard in undertaking this assessment. These factors include but are not limited to: 

  • whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place of work, hours of work, and the like
  • whether the worker performs work for others (or has a genuine and practical entitlement to do so)
  • whether the worker has a separate place of work and or advertises his or her services to the world at large
  • whether the worker provides and maintains significant tools or equipment
  • whether the work can be delegated or subcontracted
  • whether the putative employer has the right to suspend or dismiss the person engaged
  • whether the putative employer presents the worker to the world at large as an emanation of the business
  • whether the worker creates goodwill or saleable assets in the course of his or her work.

The Findings

In this instance, DP Gostencnik determined that an application of these factors led to the finding that the Uber driver was an independent contractor, and not an employee, having regard to the following considerations:

  • the high degree of control that an Uber driver has over their own hours of work
  • the requirement for the Uber driver to provide their own "capital equipment" to perform the services, in particular, a car and a smartphone;
  • the prohibition against wearing an Uber uniform or displaying any Uber logos on a driver's car
  • the requirement that an Uber driver be registered for GST
  • that an Uber driver is paid a service fee rather than wages
  • the clear description of the legal relationship between Uber and its drivers in its service agreement, which was consistent with Uber's role as a payment collection agent and provider of technology services

notwithstanding that

  • an Uber driver has little to no control over the fees charged to riders using their transport services
  • Uber enforces stringent service standards to protect the Uber brand and riders, limiting the control that an Uber driver has around the provision of their services.

A copy of DP Gostencnik's full decision is available here.

But is That the end of the Story?

No, this is not the end of the story. While forming a clear view that, under the law as it stands, an Uber driver should be regarded an independent contractor and not an employee, DP Gostencnik rightly raises a question as to whether the traditional multi-factoral approach might be outmoded, and does not provide appropriate protection to new types of workers in the digital or gig economy.

The short term nature of work in the gig economy through platforms such as Uber, Airtasker, Upworks, and Deliveroo, to name just a few, does not sit comfortably in traditional employment law frameworks, which are based around providing certainty in the performance of work and the conditions attached to the performance of that work. Does the nature of gig work make our systems of superannuation, severance pay, long service leave, etc, irrelevant in a modern workplace? Should gig workers properly be considered entrepreneurs who are running their own business and who should reasonably manage their own income and retirement arrangements?

While DP Gostencnik's decision was inherently focused on the Australian context, these questions are being raised globally, no less than by the K&L Gates Labour, Employment and Workplace Safety team in its recent Global Employer Solutions webinar in which we considered Managing Global Employment and Social Responsibility Risks in the Modern Workplace.

In this Global Employer Solutions webinar, we discussed the questions:

  • How do workers engaged through peer-to-peer platforms sit within traditional employment regulatory frameworks? 
  •  Should peer-to-peer workers sit within traditional employment regulatory frameworks?

Sharing DP Gostencnik's ideas that there is scope for the law of employment to catch pace with the evolving nature of the digital economy, we consider whether there arises opportunities for employment frameworks to evolve to provide appropriate protection to workers in the gig economy, including following the footsteps of other jurisdictions in the possible creation of a third category of worker, the dependent contractor.

What we do know is that in the absence of an evolution of employment law frameworks, employers will continue to face the challenges of trying to shoehorn their modern workforce into a rigid and out-dated regime of employment laws.

The webinar is available on demand on the K&L Gates Hub here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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