Traditional employment law frameworks are put to the test against the new “gig” economy, as the Fair Work Commission (FWC) rules that a Victorian Uber driver is not an employee.
Uber-like services and the “gig” economy
Dubbed the “gig” economy, a rising wave of contract, temporary and freelance work in Australia and across the globe has thrown a spotlight on how traditional tests for employment relationships based on control are no longer accurately representing the current employment climate.
Services like Uber and Airbnb are part of an upward trend to workforce digitalisation with increasing business structures dependent on online revenue sharing streams. The flexible and informal nature of these businesses are attractive to many workers. However, the tension between this more ad-hoc system and conventional employment ideas has been brought to the forefront in the recent Uber decision by the FWC.
An independent contractor or an employee?
In the case of Kaseris v Rasier Pacific, the FWC rejected an Uber driver’s unfair dismissal claim he filed, after his account was deactivated due to poor ratings from passengers. Uber objected to this application by alleging Mr Kaseris was not protected in the unfair dismissal jurisdiction of the Fair Work Act 2009 (Cth), as he was not an employee. The FWC agreed with Uber.
In coming to this conclusion, the Commissioner weighed up the established framework for determining the difference between an employee and an independent contractor, finding:
- Control: Drivers do not have set hours and can choose when they want to work. They are also able to accept or reject a trip without interference.
- Equipment: Drivers provide their own equipment such as a car and phone.
- Uniform: Drivers do not have to wear or display Uber’s logo in any way.
- Tax: Drivers are personally registered for GST and are not liable for PAYG tax.
- Integration: Although essential to the services Uber provides, drivers are not integrated into the company in any way.
- Exclusivity: Drivers are not forced to only provide services to Uber patrons. They can take part in other ride-sharing services too.
- Wages: The FWC concluded that Mr Kaseris was not paid a wage but instead received a proportion of the fee charged. Drivers also don’t receive super contributions.
Potential impact on your business
Whether you hire independent contractors or employees, this case decision could have potential legal ramifications on your company. As more companies incorporate digital revenue sharing into their business model, the applicability and validity of common law tests of employment relationships will be questioned as new cases appear. More pertinently, if you and your worker understand your employment relationship, the law may still characterise it differently – even if it is stated in your contract. Future developments arising from this case may impact your company’s obligations towards individuals where an employment relationship has been unintentionally created.
In the future: flying cars or redacted employee criteria
The traditional employment framework offered a binary structure where an individual either was or wasn’t an employee. During this decision, the Commissioner admitted that the current criteria may be outmoded. The law failed to consider revenue generation, relative bargaining power, and other more relevant criteria.
However, until employment law catches up to the digital society, the current tests that focus on control will continue to be applied and followed.
What do you think about this ruling? Which direction should the law be taken? We would love to hear from you! Let us know your thoughts by tagging us #lawpath or @lawpath.
