Australia: Uber driver not an employee - Fair Work Commission finds

The ceaseless trend towards casualisation and new rules of engagement in the gig economy is a modern fact of life. From bicycle couriers to ride sharers and food deliverers, relationships around work continue to fascinate. In the political realm, parliaments around the world are only slowly starting to grapple with how work is being redefined.

In December last year Deputy President Gostencnik of the Fair Work Commission delivered the first decision in Australia assessing whether an Uber driver is an employee. DP Gostencnik found that for unfair dismissal purposes, an Uber driver was not an employee.

This is a live issue globally. In 2017 the UK Employment Tribunal found that two Uber drivers were ‘workers’, and an administrative law judge in New York found that Uber drivers were ‘employees’ under state law.

In his decision DP Gostencnik finds otherwise, but acknowledges the fast paced evolution of the digital economy and the comparatively slow evolution of employment law, and contemplates whether and how Australian legislators might act.

See below for a more detailed overview.

Background

Rasier Pacific V.O.F (Uber) operates the ride sharing software platform branded as “Uber” in Australia.

In August 2016, Uber and Mr Michail Kaseris made a Services Agreement. A year later, Uber terminated the Agreement after Mr Kaseris failed to maintain an adequate overall rating.

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 raised a jurisdictional objection – that 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

DP Gostencnik upheld Uber’s objection, finding that Mr Kaseris was not an employee and not entitled to bring an unfair dismissal claim.

In making his finding, DP Gostencnik applied the established test for identifying an employment relationship, considering:

1. Control - and finding Mr Kaseris had complete control in providing services, deciding himself when to log into the Uber app and when to accept and reject rides (but conceding that Uber's imposition of service standards and pricing parameters did limit Mr Kaseris' control to a point).
2. Equipment - observing that Mr Kaseris provided his own vehicle, phone and mobile data and funded his own insurance.
3. Uniform - noting that the Services Agreement prohibited Mr Kaseris from wearing a uniform or displaying the Uber logo on his car.
4. Tax - noting that Mr Kaseris had to register for GST and was responsible for other tax liabilities.
5. How the Services Agreement categorised the relationship - and noting that it described Uber as a payment collection agent and provider of technology services.
6. Payment and benefits - noting that Mr Kaseris received a proportion of the fee charged for each trip, and did not receive employment benefits such as leave.

But in finding that Mr Kaseris was not an Uber employee, DP Gostencnik expressed concern that the long established indicia of an employment relationship ‘take no or little account of revenue generation and revenue sharing as between participants, relative bargaining power or the extent to which parties are captive of each other, in the sense of possessing realistic alternative pursuits...’.

The limitation period for appeal passed with no appeal being filed, so at this stage DP Gostencnik’s decision stands. Indeed, it is hard to conceive that without legislative intervention, any court in Australia could make a contrary finding.

Our thoughts

The decision indicates the likely status of the 60,000 or so Uber drivers in Australia under the Fair Work Act 2009 (Cth), and will likely inform the treatment of other gig economy participants in Australia. In many ways Uber arrangements are comparable to certain casual and 100% commission employment arrangements. This is yet to be explored. Indeed, developments in the characterisation of workers is likely to remain a front of mind issue for some time to come. The Fair Work Ombudsman is currently undertaking an investigation to determine whether Uber is in breach of any workplace laws after a group of drivers claimed that that they are “misclassified” as independent contractors (see article here). The decision of DP Gostencnik may well influence that process. Internationally, there has been much discussion of the November 2017 decision of the UK Employment Tribunal in Uber B.V and others v Aslam and others UKEAT/0056/17/DA (on appeal) that Uber drivers were subject to a high degree of control and were “workers” under the Employment Rights Act 1996 (UK).

While this decision of course applies different legislation, it is interesting that the UK Employment Tribunal and the Australian Fair Work Commission have reached different conclusions on the degree of control Uber has over its drivers.

Implications

DP Gostencnik's decision applies a long established legal test to a new way of working, but expressly acknowledges the limitations of doing so.  It specifically contemplates legislative change.

We expect to see movement in this space. It seems likely that Australian lawmakers will rethink legal treatment of work relationships to keep pace with the economy.

What this means for businesses remains to be seen. Until then, the traditional control test of employment will continue to apply.

In the meantime, the Fair Work Ombudsman continues to investigate Uber’s compliance with workplace laws following complaints from Uber drivers that they have been ‘misclassified’ as independent contractors. We are watching this closely.

This article was written by Anna Creegan, Senior Associate, Perth, Rachel Lee, Solicitor, Perth and Starr Brenton, Solicitor, Melbourne.  For more information or advice on this topic, please contact:

[show_profile name="Anna" surname="Creegan" jobtitle="Senior Associate, Perth" phone="+61 8 9211 7135]
[show_profile name="Starr" surname="Brenton" jobtitle="Solicitor, Melbourne" phone="+61 3 9288 1376]
[show_profile name="Rachel" surname="Lee" jobtitle="Solicitor, Perth" phone="+61 8 9211 7504]