Uber not an employer: for now

The “gig” economy. Everyone’s talking about it. Including us. And so, it was only a matter of time before the Fair Work Commission (FWC) would be required to express a view.

No access to the unfair dismissal jurisdiction

The context was an unfair dismissal claim. Uber terminated the services agreement of a driver. The driver claimed he was an employee and was sacked. Uber said he was an independent contractor, and therefore not eligible to access the unfair dismissal jurisdiction. Uber won.

So what is Uber anyway?

Never heard of Uber and don’t know what it does? I don’t believe you! But here’s what a US Court had to say in a recent decision about its business model:

“First, Uber’s self-definition as a mere “technology company” focuses exclusively on the mechanics of its platform (i.e., the use of internet enabled smartphones and software applications) rather than on the substance of what Uber actually does (i.e., enable customers to book and receive rides). This is an unduly narrow frame. Uber engineered a software method to connect drivers with passengers, but this is merely one instrumentality used in the context of its larger business. Uber does not simply sell software; it sells rides.”

In practical terms, a driver enters into a services agreement with Uber via the Partner App. Once approved and activated, the driver can accept trip requests from passengers (riders) via the Partner App. Riders on the other hand download the Rider App to book trips. Before the Fair Work Commission, Uber maintained it is merely a provider of lead generation software.

The independent contractor versus employee ledger

So, to the decision of the FWC. The Commissioner assessed the long established indicia for distinguishing between employees and independent contractors and concluded the ledger favoured the latter. For example, the Commisisoner found:

  • Equipment – drivers provide their own capital equipment, including a vehicle and smart phone and wireless data plan to access the Partner App

  • Uniform and branding – not only is it the case that drivers do not wear a uniform or display the company logo, they are expressly prohibited from doing so under the services agreement

  • Good and Services tax – drivers must be registered for GST and drivers are not subject to PAYG tax

  • Description of the relationship – although never determinative, the services agreement expressly states drivers are not employees

  • Insurance – drivers are obliged to obtain and maintain their own insurances

  • Control – drivers work when they want, do not have set hours, and have complete discretion whether to accept or reject a trip request

  • Integration – drivers are not integrated into the organisation

  • Exclusivity – drivers are not required to provide services exclusively to Uber riders

Brave new world on the horizon?

Based on traditional binary notions, the conclusion was obvious.

However, what was more interesting about the decision, was the recognition that there may be a brave new world on the horizon. Indeed, the Commissioner concluded:

The notion that the work-wages bargain is the minimum mutual obligation necessary for an employment relationship to exist, as well as the multi-factorial approach to distinguishing an employee from an independent contractor, developed and evolved at a time before the new “gig” or “sharing” economy. It may be that these notions are outmoded in some senses and are no longer reflective of our current economic circumstances. These notions 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. Perhaps the law of employment will evolve to catch pace with the evolving nature of the digital economy. Perhaps the legislature will develop laws to refine traditional notions of employment or broaden protection to participants in the digital economy. But until then, the traditional available tests of employment will continue to be applied.

The status of the new economy will continue to be tested under the traditional tests established by the High Court by asking, is the worker an employee? The debate as to whether a different test should be applied, or more protection should be afforded to workers in the new gig economy, will ultimately be a matter for Parliament. While we don't expect any parliamentary reforms for some time, Uber (and other similar platforms) may still have some challenges ahead.

Watch this space!

Author: Amber Sharp

Leading Partner: James Mattson