New Regulations for Gig Economy Workers and Road Transport Contractors in Australia

The Australian gig economy and road transport industry are set to undergo significant changes with the introduction of new laws aimed at regulating independent contractors in these sectors. These changes, stemming from the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024, will come into effect on 26 August 2024.

Introduction of ‘Regulated Workers’

The new laws introduce the concept of ‘regulated workers’, which encompasses two main categories:

• Employee-like workers performing digital platform work
• Certain contractors in the road transport industry

To be considered a regulated worker, an individual must:

1. be a party to a services contract (as an individual or as part of a body corporate, trust, or partnership);
2. perform all or a significant majority of the work under the services contract; and
3. not perform any work under the services contract as an employee

These changes will only apply where there is a ‘constitutional connection’, such as when a contractor works under a services contract with a constitutional corporation.

Employee-like Workers

The proliferation of digital labour platforms has sparked significant debate regarding the regulation of gig economy workers in Australia. These workers typically perform on-demand tasks for consumers through digital platforms, such as ride-sharing or food delivery services.

Traditionally, Australian workers have been categorised as either employees or independent contractors, each with distinct rights and regulatory frameworks. However, many gig economy workers do not fall into either classification, prompting calls for reform to clarify their rights and protections.

Within the regulated worker category, ’employee-like workers’ are specifically defined. This classification will primarily affect gig economy workers who don’t clearly fit into existing employee or independent contractor categories. To be considered an employee-like worker, an individual must meet the following requirements:

1. meet the above definition of regulated worker;
2. engage in digital platform work; and
3. satisfy at least two of the following:
   1. have low bargaining power in contract negotiations;
   2. receive remuneration at or below the rate of comparable employees;
   3. have low authority over work performance; and
   4. possess other characteristics prescribed by regulations.

Digital platform work is defined as work performed by an independent contractor through a digital labour platform under a services contract, where payment is made for that work.

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Road Transport Industry Contractors

The new laws also extend to certain independent contractors in the road transport industry, known as ‘regulated road transport contractors’. These contractors must meet specific definitional requirements to be covered by the new regulations.

Fair Work Commission’s New Powers

The Fair Work Commission (FWC) will gain new powers to regulate these workers:

1. Setting Minimum Standards: The FWC can establish minimum standards for employee-like workers and regulated road transport contractors through:
   1. Binding minimum standards orders
   2. Non-binding minimum standards guidelines

These can cover areas such as payments, deductions, insurance, and other work-related matters.

2. Road Transport Contractual Chains: The FWC can make orders or guidelines setting standards for road transport contractors, employee-like workers in the industry, and others in the road transport contractual chain.
3. Collective Agreements: The FWC will oversee a new framework for collective agreements between regulated businesses (digital labour platform operators or road transport businesses) and organisations representing workers’ industrial interests.
4. Unfair Deactivation or Termination: The FWC will have the power to resolve disputes over unfair deactivation of employee-like workers from digital platforms or termination of road transport contractors’ contracts. The FWC will consider whether a deactivation was inconsistent with the Digital Labour Platform Deactivation Code and whether it was unfair based on various factors. The FWC can order reactivation and, in some cases, restoration of lost pay.

Enforcement and Penalties

The Fair Work Ombudsman will enforce minimum standards orders and road transport contractual chain orders. Breaches of these orders may result in penalties similar to those for other Fair Work Act violations.

Eligibility and Scope

The Independent Contractors Act 2006 will also be amended to ensure consistency across workplace laws. It’s important to note that contractors earning above the independent contractor high income threshold cannot apply to the FWC for unfair deactivation or termination considerations.

Advisory Groups

To facilitate the implementation of these changes, new advisory groups will be established:

1. Regulated Worker User Group: Set up by the FWC to connect with affected workers and businesses, helping them understand the changes and engagement processes.
2. Expert Panel: A decision-making body within the FWC empowered to deal with road transport industry matters.
3. Road Transport Advisory Group: To advise the FWC and Expert Panel on road transport industry matters.

Implications for Digital Labour Platforms

Digital labour platform operators will need to reassess their practices in light of these changes. Key considerations include:

1. Identifying workers who may be classified as regulated workers or employee-like workers.
2. Adjusting contracts, policies, and work practices to comply with the new regulatory framework.
3. Reviewing deactivation processes to align with the Digital Labour Platform Deactivation Code.
4. Preparing for potential collective bargaining scenarios.

Conclusion

These legislative changes represent a significant shift in the regulation of gig economy workers and certain road transport contractors in Australia. By introducing the ‘regulated worker’ category, which includes ’employee-like workers’ and certain road transport contractors, and expanding the FWC’s powers, the government aims to provide greater protections and clarity for workers in these sectors. Businesses operating in these industries will need to carefully review their practices to ensure compliance with the new regulatory framework.