Could Landmark Decision Spell Trouble for ‘Gig-Economy’?

In a recent landmark decision of the Fair Work Commission (FWC) which will no doubt have widespread implications for the Australian ‘gig-economy’, the FWC has held that a former Foodora Australia Pty Ltd (Foodora) delivery driver (the Worker) was an employee and not an independent contractor, “despite the attempt to create the existence of an independent contractor arrangement.”

Commissioner Cambridge implemented a ‘multifactorial test’ which involved viewing the employment relationship “from a distance” to obtain an “informed, considered, qualitative appreciation of the whole picture.”

The Commissioner held that the dismissal was both a dismissal from employment and that it was harsh, unjust and unreasonable under section 387 of the Fair Work Act 2009 (Cth) (the Act). Foodora were found to have no valid reason for the dismissal as well as an unjust procedure whereby it advised the Worker of his dismissal “abruptly by way of email communication and without any proper warning”.

Compensation Ordered

The Worker sought reinstatement as a remedy, however, as Foodora is currently in voluntary administration, this remedy was not appropriate. The Worker was compensated $15,559, which was the amount that he would have earned had he continued working for Foodora for 26 weeks, being the period the Commissioner considered the employment of the worker would have continued minus the amount he had earned in alternate employment since his dismissal.

Impact on Uber & Deliveroo?

Andrew Stewart, an Industrial Relations academic and Adelaide University Law School Professor has commented that he considers the decision may not actually have dramatic implications for other major gig economy platforms. Mr Stewart noted, “we can(not) extrapolate anything from the decision in the Foodora case for platforms that operate in a fundamentally different way”. Mr Stewart made the distinction that Uber (and similarly UberEats & Deliveroo) characterises their arrangements with drivers as providing a platform or a “support service” for drivers to find customers and get paid, rather than drivers working for that platform, and accordingly they do not appear to be employees.

Mr Stewart identified that, by contrast, the Foodora contract accounted for rostering and payment for that work, whereas companies such as Deliveroo and Uber “have crafted arrangements which they say don’t amount at all to the engagement of anyone to provide work.” However, perhaps worryingly for their Australian operations, these arrangements to supply “support services” have already been rejected by UK employment tribunals.

The Future?

It remains likely that the Foodora decision will give rise to similar cases in the future, challenging the classification of ‘gig-economy’ workers. Proposals for legislative amendments may arise to address union concerns in the pre-election period. Certainly, companies with similar arrangements may need to re-examine such arrangements in the context of the decision to determine the nature of their commercial relationships.

Read the full decision: Joshua Klooger v Foodora Australia P/L

If you have any questions in relation to the classification of employees and/or contractors, please do not hesitate to contact Nick Stevens, Jane Murray or Angharad Owens-Strauss.