Are ‘gig’ workers Employees or Contractors? Uber result for the share economy companies

A recent decision by the Fair Work Commission, Kaseris v Rasier Pacific V.O.F, has found that an Uber driver is a contractor and not an employee. The decision will likely inform how the engagement of other gig workers in the ever-growing share economy will be treated in the future.

Background

In August 2016, Mr Michail Kaseris entered into a services agreement with Uber. A year later, Uber terminated the agreement.

Mr Kaseris brought an unfair dismissal claim under the Fair Work Act 2009 (Cth), claiming that Uber was his employer and had unfairly dismissed him.

Uber claimed the Fair Work Commission did not have jurisdiction to hear the claim because Mr Kaseris was not its employee. Uber claimed that its drivers like Mr Kaseris were simply software users of technology provided by Uber.

The decision

The Fair Work Commission concluded that Mr Kaseris was not an employee and was not entitled to pursue the unfair dismissal application.

The work-wages bargain

The Fair Work Commission commented that an employment contract is fundamentally a work-wages bargain.  There is a minimum level of mutual obligation necessary, being an obligation of a worker to perform work or services that may reasonably be demanded under the employment contract and an obligation of the employer to pay the worker for such work or services.

It was found that the work-wages bargain did not exist.  Mr Kaseris was not required to perform services for Uber, instead Uber simply provided access to its app and remitted fares and fees.  Mr Kaseris was free to perform as much or as little work as he liked, when, where and for whom he saw fit.  In addition, Uber did not pay Mr Kaseris for the provision of his driving service.  The fee was a commission on the fee paid by people who used the ride service for each trip.

The multi-factorial approach

Australian courts have applied a multi-factorial approach, where no single factor is decisive, to determine if an individual is an employee or a contractor.

In this case the Fair Work Commission applied this approach and considered, in particular, the following indicia:

  1. Control –Mr Kaseris had complete control over the way in which he conducted his services.
  2. Equipment –Mr Kaseris provided his own vehicle, phone and mobile data and funded his own vehicle registration and insurance.
  3. Uniform –Mr Kaseris was not required to wear a uniform or display the Uber logo on his car.
  4. Tax –Mr Kaseris was required to register for GST and remit all tax liabilities.
  5. The services agreement– The agreement categorised Uber as a payment collection agent and provider of technology services.
  6. Payment and benefits –Mr Kaseris did not receive employment benefits such as leave or superannuation benefits.

Implications for other share economy companies

This decision provides guidance for how other gig workers may be treated in the share economy.  However, different share economy companies operate under different operational models and the matter is far from settled.

The decision also highlights that current tests for an employment relationship in Australia are outdated when applied to the share economy.

In reaching the decision, the Fair Work Commission recognised the limitations of using established legal indicia to determine if Mr Kaseris was an employee rather than a contractor, as these principles were developed before the emergence of the share economy and did not take into account changes to the manner in which gig workers are providing their services.  The Fair Work Commission suggested that the legislature may develop new laws to broaden employment protections to workers in the share economy but, until then, the traditional tests of employment will continue to be applied.

There has been a growing public policy debate over how to regulate the share economy and it is likely that greater scrutiny will follow.  Until there is a change to employment legislation, businesses in the share economy which provide technology to facilitate the provision of goods or services can likely continue to treat their workers as contractors and be protected from employee claims.

DVM Tips

If you are a share economy startup or you operate a business model where you utilise contractors from the share economy:

  • ensure your stakeholder agreements clearly articulate your business model; and
  • watch for developments in this space.

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