Earlier this week the Fair Work Ombudsman confirmed an investigation into potential breaches of federal workplace laws by the Australian branch of multinational ride-sharing service, Uber. The Ombudsman will commence the investigation by interviewing drivers who use UberX, Uber’s most popular low cost platform, about their working conditions and payment arrangements.

This investigation comes just months after a similar probe into Pizza Hut franchises, which allegedly revealed substantial “sham contracting” activity across Australia. According to Tony Wu, head of growth and recruitment platform Weploy, the current political and legislative interest in industrial standards of the “gig economy” can be attributed to the increasing number of people considering jobs like Uber their primary form of income, rather than “cash on the side” as it was viewed previously.

Contractors vs. Employees?

Driver activist group Ride Share Drivers United has petitioned for the Ombudsman to examine Uber’s current practice of labelling their drivers as contractors rather than employees, asserting that this amounts to “sham contracting”. This is a practice whereby an employer attempts to disguise an employment relationship as an independent contractor relationship. They allege that by doing so Uber is avoiding paying fair work entitlements such as insurance, superannuation, or leave.

In contrast, Uber argue they are within the bounds of a contractor relationship with their 60,000 Australian “partner-drivers” due to the high levels of autonomy which, according to Uber co-founder and former CEO Travis Kalanick, allows users of the app to “be their own boss.” The activist group contests this point, expressing the view that Uber’s ability to exclude drivers from the app and manipulate rates minimises the control drivers have.

For more information on the difference between an employee and a contractor check out our previous guide.

How will the Ombudsman make the decision?

The Fair Work Ombudsman has the authority to enforce workplace laws, and could impose penalties or take legal action (as it did with Pizza Hut) against Uber if they are found to be in breach of employment regulations contained in the Fair Work Act 2009 (Cth) and the Independent Contractors Act 2006 (Cth). The decision about any breaches, which will likely centre around whether Uber drivers are employees or contractors, will be determined by examining the totality of the relationship between the drivers and Uber.

Factors which may indicate as to employment status are things such as degree of control, hours, expectation of work, who bears any financial risk, superannuation, tax, method of payment and leave entitlements.

Uber faced a similar class-action contesting the contractor-employment model in the US, where the company made a $130 million settlement in exchange for drivers not being considered employees. Whether this American ride-sharing precedent will influence any decision made by the Ombudsman will be seen in the coming months.

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Lily O'Keefe

Lily is a Paralegal, working in our content team, which aims to provide free legal guides to facilitate public access to legal resources. With a keen interest in media and IP law, her research focuses on the evolving role of the law to navigate new and emerging information platforms.