Fair Work’s Christmas present to Uber

Reading time: 3 min(s)

A few days before Christmas the Fair Work Commission published a first of a kind decision in Australia that an Uber driver who claimed he was unfairly dismissed was not an employee but a self-employed independent contractor.

Is a gig a business or a job?

Mr Kaseris was a driver whose account was deactivated by Uber after his client rating fell below its minimum rating requirements. Mr Kaseris claimed that by deactivating his account, Uber had terminated his employment.

Mr Kaseris is not the first Uber driver to bring an unfair dismissal claim, but Uber has reportedly chosen to settle claims rather than contest them. Given the multiple legal losses Uber has suffered recently in the UK, US and Europe that has probably been a sensible strategy. But Mr Kaseris’ claim didn’t settle and so for the first time in Australia a tribunal had to decide the question of whether an Uber driver is an employee or contractor.

The Fair Work Commission decided Mr Kaseris was not an employee because an essential element of an employment relationship was missing – the “work-wages bargain” whereby an employee is obliged to perform work and the employer in return is obliged to pay wages.  Mr Kaseris was free to work as much or as little as he wanted and the Commission decided Uber merely acted as an agent in processing fares paid by the passengers to the driver.

Under the Uber model, Mr Kaseris:

  • had control over when, where and for whom he drove;
  • provided his own equipment, including his car and smartphone; and
  • paid his own tax and maintained his own insurance.

Unlike the UK Employment Tribunal’s recent decision, which highlighted the many ways in which Uber controlled its London drivers, the Commission found that Uber in Australia did not exercise significant controls over its drivers.

Implications for the Australian gig economy

In many ways this decision ratifies an important element of Uber’s business model – its classification of drivers as contractors without entitlements to minimum wages, sick and holiday pay, Workcover or unfair dismissal protections.

However, it’s unlikely that the decision will remove Uber or other platform based businesses from the spotlight any time soon.

The issues that tipped the scales in Uber’s favour are all issues that could easily be relied upon for a court in only a slightly different context to decide that a gig worker was a casual employee.

Additionally, the Fair Work Ombudsman is investigating Uber’s compliance with workplace laws, a Senate report into corporate avoidance of the Fair Work Act has recommended changes to the law to protect gig economy workers, and a test case may be in the works for food delivery drivers at Foodora and Deliveroo.

Even the FWC has suggested that the law may need to change to catch up with the gig economy. After deciding that Mr Kaseris was a contractor, the Commission suggested that established legal categories of employee and contractor may be “outmoded” as they “take little or no 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 or engaging in competition.”

In short, businesses operating in the gig economy or contemplating moving to a gig workforce model will still need to be very careful about the reality of their arrangements and the risks of a gig workforce compared to more traditional workforce arrangements.