Gig economy regulation likely as Fair Work umpire confirms workers are contractors

The Full Bench of the Fair Work Commission has clarified that gig economy workers are to treated as contractors and not employees – regardless of whether the true nature of the employment relationship suggests otherwise.

While the decision in Deliveroo Australia Pty Ltd v Diego Franco [2022] FWCFB 156 upholds the spirit of freedom of contract which lies at the heart of the gig economy, it is also likely that the Federal Government will step in to legislate minimum standards to ensure there are adequate protections and benefits in place for gig economy workers that reflect the often perilous nature of their work.

The Full Bench decision in Franco

The 17 August 2022 decision of the Full Bench overturned an earlier decision of the Fair Work Commission that classified Deliveroo driver Diego Franco as an employee.

Deliveroo successfully appealed that decision on the grounds that the Commission had no power to determine that Mr Franco was protected from unfair dismissal under the Fair Work Act 2009 (Cth) because he was not an employee for the purposes of that Act. They were successful in that appeal.

The Full Bench found that Mr Franco was not classified as an employee and consequently, he was not a person protected from unfair dismissal and that the Commission had no jurisdiction over the matter.

In making their determination, the Full Bench had the benefit of the decisions of the High Court in Personnel Contracting and Jamsek which also looked at the issue of independent contractors v employees.

The gig economy contract

The Full Bench looked to the written contract between the parties and the characterisation of the work relationship as outlined in the contract. In this case, they considered the written agreement between Mr Franco and Deliveroo in 2019 and the following key clauses and factors:

• No control over how work performed: Mr Franco had the autonomy to choose any route that he determined to be safe and efficient and at his discretion, use any mode of transport to carry out a delivery.
• Vehicle the worker’s own: Mr Franco had to supply his own vehicle – which could be of any type (eg. bike, car) – at his expense.
• Worker could engage sub-contractor: The agreement did not require the work to be performed personally by Mr Franco. Instead, he had the right, without the need for Deliveroo’s prior approval, to arrange for someone else to perform his services.
• Administrative fee payable: Mr Franco had to pay an administrative fee to Deliveroo to be able to access Deliveroo’s software.

True nature of employment relationship

The Full Bench considered that there was some merit in viewing Mr Franco as an employee of Deliveroo. “As a matter of reality”, it considered that Deliveroo did have a degree of control over how Mr Franco performed his work, as well as the fact that he would present to customers as a “Deliveroo delivery driver”. However, citing the decision in Personnel Contracting, the Full Bench observed that “we must close our eyes to these matters” and only consider the terms of the written contract between the parties.