In recent years, the popularity of online service apps such as Uber, Diliveroo and Foodora has skyrocketed and Australia has embraced the ‘gig economy’ with open arms. This new movement refers to environments where businesses or individuals contract with free agent workers (usually through an app-based platform) for short-term engagements. As a result, an increased number of workers are trading off the stability which traditional employment provides for flexibility and autonomy whereas others are simply keen to earn a little extra cash on the side.
However, workers can experience inconsistent hours of work, patchy cash flow and lack of entitlements such as paid sick leave, holidays, notice of termination and so on. Additionally, workers are expected to provide their own physical assets and are required to pay any maintenance costs out of their own pockets. There is also the question of who is responsible if something goes wrong. Issues have arisen regarding the legal implications of these kinds of arrangements including whether these workers are truly independent contractors or in reality employees.
In Australia, the current status of ‘Gig’ workers is that they are recognized as independent contractors, meaning they are ‘self employed. Therefore, the “app” owner/company avoids paying entitlements such as superannuation, workers compensation, leave and certain taxes, and can essentially end the relationship at the drop of a hat. However, companies who engage these workers need reminding to closely scrutinize the arrangement to ensure they are not actually employees in disguise.
If an employment relationship is found, minimum entitlements and protections under the award/NES must be afforded. For instance, many Diliveroo drivers receive less than what they would under the award. Typically, riders can expect $16 per hour, and $2.50 extra per delivery however under the award a courier earns $22 per hour with penalty rates on Saturdays and Sundays.
More significantly, companies providing these services must be alert to the fact that vicariously liability can be extended if the independent contractors are not truly conducting their own business. This question was raised in Hollis v Vabu. Vabu, trading as “Crisis Couriers”, conducted a business of delivering parcels and documents using cyclist couriers. A pedestrian was negligently struck down by an unidentified cyclist, who was wearing a green jacket on which was printed “Crisis Couriers”. The pedestrian bought an action against the company, claiming they were vicariously liable for its workers negligence. However, the company maintained their workers were independent contractors and vicarious liability could not extend. The case went before the High Court, who considered the fact that:
- Workers were unable to exercise any significant degree of control over their work.
- Workers were not provided an opportunity to freelance.
- There were strict rules relating to attendance and the ability to refuse work.
- Workers were unable to delegate jobs.
- Workers were required to wear uniforms bearing the company logo ,
Consequently, it was determined that the company was vicariously liable for the action of the courier, as the couriers were not conducting their own business nor did they demonstrate any true independence.
It is possible that similar principles may be applied to Uber or Deliveroo in relation to the negligence of drivers or delivery personnel- something that is yet to be tested in Australian courts.
Recently, the issue of whether uber drivers are independent contractors or employees was challenged in a UK tribunal. It was found that Uber drivers are in fact employees and not independent contractors and therefore entitled to the ‘national living wage’ and holiday pay. Uber argued that it is a technology company, not a transport company, and that drivers were contracting with riders directly, not with Uber. Alternatively, Uber drivers argued that they were pressured to work long hours, accept jobs and that there were repercussions if they declined a job.
The tribunal rejected Uber’s argument and found that the drivers were working directly for the Uber business, particularly given that, if not for Uber, there was no relationship between the driver and the rider. However, Uber are currently appealing this decision so onlookers interested in this movement should stay tuned.
Where to for Australia?
Whilst this decision has no bearing on Australian law, it’s only a matter of time before similar issues are heard in the Australian courts. The FWO is tightening the ropes in penalising ‘sham contracting’ arrangements therefore employers are reminded to exercise diligence over their labour arrangements and ensure their workers are properly classified. If Australia follows the UK lead we may see decisions where companies like Uber- and maybe even head franchisors such as 7-11- are responsible and liable for drivers (in the case of Uber) or franchisees (in the case of 7-11) even though there is no direct employment relationship.
Australian consumers and workers have embraced the ‘gig economy’, however this has spurred legal debate regarding whether these workers are employees or independent contractors. Only time will tell what approach the Australian courts will take and whether or not they will follow the UK example of an implied employment relationship with companies like Uber and their drivers.
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