The British Employment Tribunal recently held that Uber drivers should be treated as ‘workers’ for the purposes of various British statutes, in proceedings brought against Uber by current and former Uber drivers.
The decision would be akin to the Fair Work Commission holding that Uber drivers are ‘employees’ for the purposes of the Fair Work Act 2009 (Cth) which would result in the drivers being able to bring claims for underpayment of wages and unpaid overtime as well as a claim for their employee entitlements, such as annual leave and long service leave.
Sham Regimes Treated Harshly
The Tribunal was particularly critical of the extent to which Uber endeavoured to use ‘legal fictions’, ‘twisted language’ and ‘new concepts’ in its contracts with drivers and customers in an endeavour to avoid the existence of an employment relationship.
The Tribunal noted that such regimes should be treated with ‘scepticism’, and that there is a place for a ‘common sense’ interpretation of the relationship between Uber and its drivers.
This ‘common sense’ approach directed the Tribunal’s attention to a number of factors concerning the way in which work is done by Uber drivers in practice. It diverted its attention away from the formal legal structure that Uber had created.
How do I tell if the Worker is an employee or a contractor?
The test for determining whether a person is an employee or contractor in Australia also focuses on the substance of the relationship rather than its legal form. A similar ‘common sense’ approach is likely to be taken by Australian courts and tribunals. In other words, a court or tribunal will look behind the contract and look at the actual relationship between the worker and hirer, including what the worker actually did on a day to day basis. The main questions that will be asked in determining if a person is an employee or a contractor are:
1. Does the hirer have the right to exercise control over the way work is performed; or
2. Is the worker truly in business for themselves?
The more control a hirer has over a worker, the more likely that an employment relationship exists. In determining whether a worker is truly in business for themselves, a court or tribunal will look at how integrated the worker is in to the organisation and how they present themselves to the world at large. Can the workers knock back work and are they free to work for others? If not, this suggests an employment relationship.
The Bottom Line
This focus on form over substance suggests that employers in emerging industries should be wary of their ability to innovate with employment structures as a means of avoiding their obligations under labour laws.
Those who try to be too clever for their own good are likely to be subject to significant legal and reputational risk.
This may lead to ‘workers’ who were attempted to be classified as independent contractors being able to make a claim for their entitlements as employees, such as claims for unpaid overtime or underpayment of wages under a modern award and a claim for all of their leave entitlements.
The best way for entrepreneurs in emerging industries to be both efficient and compliant is to plan. This planning process should involve an assessment of your human resources needs and an analysis of how best they can be satisfied in a legally compliant way.
Updates
Since the original time of publication, Uber Australia has struck a landmark agreement with the Transport Workers Union (TWU), establishing a statement of principles that set to re-regulate the previously unregulated rideshare and food delivery industry. The union-platform agreement sets some minimum standards and practices previously unavailable to drivers, including minimum earnings, dispute resolution and the right to join a union. While this agreement hasn’t solved the classification debate, it represents a promising alternative that may spell the end of the costly, age-old debate. This type of union-platform collaboration sets a hopeful outlook for the future of the gig economy – establishing a statement of principles that protects workers regardless of their classification as either an employee or independent contractor. It also serves to help the platforms like Uber in turn, by avoiding the cost and reputational damage of ongoing litigation caused by shortcomings of the classification system.
The information contained in this post is current at the date of editing – 3 October 2024.
