The Fair Work Ombudsman has commenced action against Foodora in the Federal Court. The Ombudsman has argued that Foodora’s characterisation of three drivers as contractors was misconceived, as they should have properly been characterised as employees of Foodora. This will be an interesting outcome for the gig economy, as last year the Fair Work Commission handed down a decision finding that Uber was not an employer. It is clear that the law is falling behind in dealing with the ever growing ‘gig economy’ and the culture of the sham contract.
The characterisation of a worker as a contractor or an employee is a holistic test. It looks at all of the factors of the working relationship. In the case of Foodora, the Ombudsman drew attention to the fact that delivery drivers wear a uniform, receive a fixed rate of pay, and are subject to quite a high level of scrutiny and oversight by Foodora. This is evidence that the drivers should be classed as employees.
Effectively, the drivers don’t run their own business, which is one of the primary indicators of a contractor.
The Ombudsman’s arguments are consistent with the Federal Court’s decision last year in Putland v Royans Wagga Wagga Pty Limited [2017] FCA 910 which demonstrated the court’s strict stance on the ‘sham-contract’, where employers improperly induce their employees to enter into independent contract agreements rather than employment relationships to avoid the payment of benefits under the National Employment Standards and awards.
Employees – if you hired as an independent contractor and you believe that you should be an employee, call us on (02) 9199 8597 or email us for assistance.
Employers – if you believe that some of your contracting relationships are non-compliant and your workers could be possibly characterised as employees, call us on (02) 9199 8597 or email us for assistance so you can quickly fix the problem. Cases have shown that if a dispute over a ‘sham contract’ is brought to court, it can be incredibly costly for all parties involved.
The information contained in this post is current at the date of editing – 29 August 2024.
