Jacquie Seemann and Conor McNair

Uber and Foodora – new legal challenges

Jacquie Seemann and Conor McNair

2 October 2018

Award Conditions Employment Contracts

In May 2018, we reported that the Fair Work Commission had found an Uber driver was an independent contractor (not an employee) and so was not entitled to claim unfair dismissal. You can read our article regarding that decision, Kaseris v Rasier Pacific VOF [2017] FWC 6610, here.

Developments since then involving Uber, and a similar platform, Foodora, include:

  • Earlier this year the Commission found another Uber driver was not an employee. In this case, Pallage v Rasier Pacific Pty Ltd [2018] FWC 2579, the Commission noted that although Uber invited the Commission to rely on the Kaseris decision to accept that its drivers were independent contractors and not employees, each case must be tested on its own facts and circumstances and so it had to ask the question.
  • The circumstance-specific nature of the employee/independent contractor test is at the heart of the high-profile unfair dismissal claim of former delivery rider, Josh Klooger, against Foodora. Klooger relies, amongst other things, on being paid an hourly rate even after Foodora shifted to paying per delivery for other riders.  The Commission is yet to publish a decision.
  • The Fair Work Ombudsman’s claims against Foodora on behalf of three other Foodora riders/drivers, alleging sham contracting and resultant failure to pay employee entitlements, were interrupted by the company’s voluntary administration.
  • Although the administrator has consented to Mr Klooger’s unfair dismissal claim continuing, the Fair Work Ombudsman has indicated that it will not continue its case against Foodora while it is in administration.
  • In August this year, shortly after they were appointed, the administrators informed creditors that:
    • the ATO is satisfied that Foodora should have contributed superannuation on behalf of the workers, because the circumstances of their engagement either make them employees or satisfy the deeming provisions in s.12(3) of the SGAA; and
    • Revenue NSW is similarly satisfied that Foodora should have included the workers’ earnings in calculating its payroll tax, again, because the circumstances of their engagement either make them employees or satisfy the deeming provisions in NSW payroll tax legislation.

These developments reinforce that:

  • even though Foodora may not feature in the Australian market in future, the dilemma Foodora is facing underlines the wide-reaching implications of the legal status of workers in all gig economy enterprises; and
  • the gig economy is not a market to enter without a considered plan to meet all deeming obligations of those who engage gig workers, including PAYG W income tax, workers’ compensation and, as has come up in the context of Foodora, superannuation and payroll tax.

These cases (and resultant headlines) dealing with the gig economy and long-term ‘casual’ employment draw further attention to campaigns by the unions and the Fair Work Ombudsman to closely scrutinise entrenched working relationships. The outcomes demonstrate that complex issues such as the right categorisation of a worker as an ’employee’, ‘independent contractor’, ‘casual’ or ‘part-timer’ remain a fundamental challenge for any business to get right so as to ensure compliance with workplace laws. If you have any questions about your own operations please feel free to contact our Employment and Safety team.