Michael Cochrane (Special Counsel) and Adrian Faelli (Lawyer) share their insights on the latest trends in the gig economy.
Last month, the Fair Work Ombudsman (FWO) decided to discontinue its well-publicised Federal Court underpayments claim against Foodora Australia following the company’s administration and subsequent exit from the Australian market. While gig economy businesses (and businesses that use their services) might have breathed a sigh of relief following this result, the reality is the FWO would have pursued the action but for Foodora’s lack of funds.
The Foodora result is perhaps a false reality as the inherent employee versus contractor tensions continue to challenge how Australia’s current legal framework deals with the gig economy more generally. We expect that it is now only a matter of time before the FWO announces its next big test case against a well-known gig economy operator like Foodora.
Klooger v Foodora Australia and the finding of an employment relationship
The FWO’s decision to initiate a claim for underpayments against Foodora came after the landmark finding of an employment relationship between Foodora and a Delivery Manager in Klooger v Foodora Australia Pty Ltd  FWC 6836 (16 November 2018) in which Commissioner Cambridge found that the totality of the relationship between Foodora and Joshua Klooger should be characterised as one of employment and that as a matter of “practical reality”, Foodora exercised sufficient control over how and when the employee performed his duties. Whilst many gig economy operators may have been concerned about the landmark Foodora decision – it also served to reinforce the reality that the courts and tribunals in Australia are willing to look past form and subjective intentions to examine the true nature of the relationship between the parties in applying the well-established multifactorial test under the common law.
Structuring and substance are critical – Uber again found not to be an employer
In contrast to the Foodora decision, the FWC have continually found that Uber is not an employer of drivers who use their ride-share app. The most recent decision of Suliman v Raiser Pacific Pty Ltd  FWC 4807 (12 July 2019) reinforced the earlier decisions of Pallage and Kaseris in finding the driver was not an employee of Uber due to the fundamental lack of the work-wages bargain. The lack of an obligation to perform work and consequences for not performing work were such that the Commission could not characterise a driver’s use of the app as an employment relationship.
Additionally, following its findings in its investigation into Uber’s Australian business, the FWO has also recently announced that it will not be taking further action to require Uber to comply with Australian workplace laws under the Fair Work Act. The findings were specific to Uber and did not have wider implications for the gig economy more generally.
Notwithstanding the recent Foodora and Uber results, gig economy businesses are clearly not out of the woods yet when it comes to how they engage and manage the services of their workers.
While the multifactorial test to establish an employment relationship is well-trodden territory, examining the issues of control, consequences for not performing work, subcontracting and the work-wages bargain continues to be a case-by-case proposition for businesses operating in this space.
With gig economy businesses only ever one decision away from serious consequences to their business models, it remains crucial for both gig economy providers and companies that use their services to remain vigilant about continuing to review their gig/contingent workforces and assessing and managing the risks of any potential allegations of non-compliance with Australian workplace laws.