Employment Status

and the Gig

Economy: A View
from Australia
Pauline Bomball
Published September 28th, 2018

The employment status of Uber drivers has, to date, been

considered in two Australian cases.  In both cases, the Fair Work
Commission (Australia’s national workplace relations tribunal),
concluded that the drivers were independent contractors and
thereby ineligible to bring unfair dismissal claims under
Australia’s federal labor statute, the Fair Work Act 2009 (Cth).
Background
In Australia, many statutory labor and employment rights, such
as those pertaining to collective bargaining, minimum wages and
unfair dismissal, are conferred upon employees only.  In the
absence of a statutory definition of the term “employee”,
Australian courts and tribunals apply a common law multifactorial
test that requires the weighing up of a range of factors, including
whether the hiring entity has a right to control the worker;
whether the worker is required to perform the work personally;
whether the worker is integrated into the hiring entity’s business;
whether the worker is paid per task or by reference to time
worked; whether the worker supplies her own equipment;
whether the worker is permitted to work for others; and whether
the hiring entity has assumed responsibility in relation to
taxation, superannuation, workers’ compensation and leave.

The Uber Decisions
The first decision, Kaseris v. Rasier, was handed down on 21
December 2017.  In concluding that the former Uber driver was
an independent contractor, Deputy President Gostencnik noted
that the driver had “complete control” in respect of his work.  He
could choose when and for how long he worked.  He could decide
when to log on and off the Partner App and whether to accept or
reject trip requests.  While the initial services agreement between
Uber and the driver had stipulated that he would be
automatically logged off for two minutes if he did not accept a
minimum number of trip requests, this automatic block out was
removed from March 2017.  Uber controlled pricing and enforced
service standards, but these were “not
overwhelmingly strong factors.”
As to the other factors, Deputy President Gostencnik noted that
the driver supplied his own equipment, including his vehicle and
phone, and was responsible for insuring and keeping his vehicle
registered.  Uber did not make superannuation contributions on
his behalf, nor did it provide him with leave entitlements or
arrange for workers’ compensation for him.  The driver was
responsible for his own taxation arrangements.  He was paid a
fee for each trip, rather than wages.  The services agreement
prohibited him from displaying the Uber logo on his vehicle and
clothes.  The agreement was labelled an independent contracting
arrangement.  While Deputy President Gostencnik acknowledged
that labels are not determinative, he said that the “totality of the
relationship” supported the label.

As to the integration factor, Deputy President Gostencnik

observed that “although drivers are necessary in order that
[Uber] can generate income, there is little material from which it
may be concluded that there is any significant integration” of the
drivers into Uber’s business.  In addition, he said that there was
no work-wages bargain between Uber and the driver, in the sense
of “an obligation on the one side to perform the work or services
that may reasonably be demanded under the contract, and on
the other side to pay for such work or services” because the
driver was under no obligation to perform any work for Uber and
Uber had no legal obligation to the driver save for giving him
access to the Partner App and remitting the fares for each trip.
Deputy President Gostencnik referred to Aslam v. Uber (which
was upheld on appeal, and is now subject to a further appeal) in
which the UK Employment Tribunal had found that Uber drivers in
London fell within the statutory “worker” category under UK
employment legislation.  However, he said that Aslam was “of no
assistance” because it concerned the “worker” category, which
was more expansive than the employee category.
In the second decision, Pallage v. Rasier (handed down on 11 May
2018), Commissioner Wilson proceeded along largely similar
lines.  He did, however, acknowledge that it was not clear that
the Uber driver ran his own business, noting that the work was
“largely unskilled” and that the driver “did not bring anything
especially entrepreneurial to the arrangement, merely the
provision of things such as his time and his car.”  Nevertheless,
Commissioner Wilson observed that all of the factors, except for
two, indicated that the worker was an independent contractor. 
The two factors in favour of employee status were that Uber had
the right to discharge a driver for breaching its service standards
and that the driver was required to perform the work personally.
Analysis
Several points warrant discussion.  I will address four of those
here.  First, in both Kaseris and Pallage, the Commission
endorsed the point made by a US District Court judge that “Uber
does not simply sell software; it sells rides.”  That is, Uber is a
transportation company, not a technology company.  Other parts
of the judgment in Kaseris, including the conclusion that there
was no significant integration of the drivers into Uber’s business,
are difficult to reconcile with this point.  There is some
uncertainty surrounding the concept of integration, but on one
view, it requires consideration of whether the work performed is
integral to the hiring entity’s business.  If Uber is a transportation
company, then the better view is that the drivers – who carry out
the transportation services – are integrated into Uber’s business.
Second, in concluding that Uber exercised limited control over its
drivers, the Commission focused on the drivers’ freedom to work
whenever and for however long they wished.  However, a holistic
assessment of the relationship reveals a far greater degree of
control.  Among other things, Uber controls prices, sets service
standards, monitors those standards through the customer
ratings system and discharges those who fail to
meet the standards.
Third, in some Australian cases (e.g, FWO v. Quest; On Call
Interpreters; cf Tattsbet v. Morrow), it has been observed that the
“ultimate question” is whether the worker is an entrepreneur
carrying on her own business.  If the answer is yes, then the
worker is an independent contractor; otherwise, she is an
employee.  Both Kaseris and Pallage adopted this “ultimate
question”.  Yet, if entrepreneurialism is the touchstone, then the
better view is that Uber drivers are employees.  Uber drivers are
not entrepreneurs.  Among other things, they cannot set their
own prices nor “grow” their own businesses.  As the UK
Employment Tribunal observed, “the notion that Uber in London
is a mosaic of 30,000 small businesses linked by a common
‘platform’ is to our minds faintly ridiculous.”
Finally, while Deputy President Gostencnik said that the UK
Employment Tribunal’s decision was of no assistance because it
was based on the “worker” category, a closer examination of the
decision indicates that it may equally have supported a finding of
employee status.  As Professors Stewart and Stanford
have noted, “it seems likely that, if asked, the tribunal would also
have found the drivers to be employees at common law.”
A former delivery rider has recently commenced unfair dismissal
proceedings against food delivery company Foodora.  The Fair
Work Commission will, accordingly, soon have another
opportunity to clarify the employment status of workers in
the gig economy.

CONTINUE:

1. Pallage v. Rasier
2. Kaseris v. Rasier
3.