The question of whether a worker is an employee or contractor has been the subject of much judicial consideration.
In mid-August, the Full Bench of the Fair Work Commission (Full Bench) handed down its decision in Deliveroo Australia Pty Ltd v Franco [2022] FWCFB 156 and reversed an earlier decision of the Fair Work Commission (FWC) to find that a Deliveroo rider was a contractor and not an employee. In doing so the Full Bench applied, as it is required to, recent decisions of the High Court.
Background
Diego Franco worked for Deliveroo, a food delivery business operated through electronic platforms, as a delivery rider from April 2017 to April 2020 when Deliveroo disabled Mr Franco’s access to the Deliveroo Rider App. Deliveroo terminated Mr Franco’s contract for not delivering orders quickly enough.
In May 2020 Mr Franco commenced an unfair dismissal claim in the FWC. In considering the claim, and in order for Mr Franco to receive protection from unfair dismissal under the Fair Work Act 2009, the FWC was required to consider whether Mr Franco was an employee. It applied the multifactorial approach which found that the practical reality of the relationship meant Mr Franco was an employee of Deliveroo and that he had been unfairly dismissed. Our earlier discussion of the decision in Franco v Deliveroo Australia Pty Ltd [2021] FWC 2818 can be accessed here.
Deliveroo appealed the decision.
High Court decision
Meanwhile, the High Court was asked to consider similar issues.
In CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel Contracting) and ZG Operations Australia Pty Ltd 7 Anor v Jamsek & Ors [2022] HCA 2, the High Court determined that the multifactorial approach was no longer the correct approach in determining whether a relationship is that of employee or contractor. Rather, where a written contract regulates the relationship of the parties, and the contract is not a sham contract, the rights and obligations of the parties under the written contract determine the characterisation of the relationship, not the dealings between the parties. Our earlier discussion of these cases can be found here.
Full Bench decision
In considering Deliveroo’s appeal, the Full Bench was required to follow the High Court’s decisions and consider the agreement that governed the relationship, rather than the actual working relationship between the parties. The Full Bench overturned the earlier decision of the FWC. The Full Bench acknowledged that, had it been permitted to consider the factors considered by the FWC, it would have followed the FWC’s earlier determination. In a practical sense, Deliveroo exercised a degree of control over Mr Franco’s performance. Mr Franco presented himself to the world as part of Deliveroo’s business and the relationship was one of personal service. However, there were key elements that supported a finding that Mr Franco was an independent contractor, namely:
- Deliveroo lacked control over how Franco performed his work;
- Franco provided his own vehicle;
- The agreement allowed Franco to appoint someone else perform the services; and
- Franco had to pay a fee to access software and administrative services of Deliveroo.
Where to from here?
The Full Bench decision means that workers in the “gig economy” are not considered employees and are therefore no longer afforded protections under the Fair Work Act such as a minimum wage, superannuation and protection from unfair dismissal.
Unless legislation is introduced to protect gig economy workers, the principles set out by the High Court in its decision in Personnel Contracting will continue to apply to similar cases.
To discuss your employee and contractor contracts, contact Employment Law Partner, Heather Richardson.
