Employee or Independent Contractor? Uber decision a useful guide for businesses

//Employee or Independent Contractor? Uber decision a useful guide for businesses

Uber has successfully argued that its drivers are independent contractors and not employees, following the Fair Work Commission’s (‘FWC’) 21 December 2017 decision of Kaseris v Rasier Pacific V.O.F.

Mr Kaseris claimed he was unfairly dismissed after he had his Uber account deactivated after receiving low customer service ratings. Raiser Pacific (‘Uber’), argued that Mr Kaseris was not entitled to an unfair dismissal claim as he was an independent contractor and not an employee, as required by the Fair Work Act 2009 (Cth).

The decision is important for businesses that provide a software platform and marketplace for independent couriers, such as Zoom2u and Deliveroo.

The decision also provides a useful outline on how the FWC will decide whether a genuine independent contractor relationship exists.

The following key factors were examined by the FWC, in determining the objective character of the relationship:

Services Agreement

The terms of the contract were carefully considered in relation to each of the factors listed below.

Driver had control over the manner, place and hours of work

Drivers had complete discretion as to manner in which they performed their work. This included their ability to accept or reject fare requests, discretion on when and where they use the app, and the absence of any minimum quota imposed by Uber. These factors outweighed the ability for Uber to impose a fare surcharge during busy periods, and Uber’s ability to deactivate accounts where drivers do not meet the service standards.

Non-exclusive relationship between the driver and Uber

The driver was allowed to make use of another software application to provide transportation services, or other engage in other types of work or employment. This is expressly permitted under the Uber Services Agreement.

Driver was responsible for their own capital and business expenses

The driver provided their own capital equipment, including their vehicle, smart phone and wireless data plan. Vehicle registration and insurance were also the responsibility of the driver, and deemed to be a significant factor.

No permitted display of Uber logo or branding

The driver was not permitted to display any of Uber or its affiliate’s name, logo or colours on their vehicle or clothing.

Driver was responsible for their individual tax affairs

  • The driver was also required to register for and remit GST, and manage their tax affairs themselves.

When all the factors were considered together, they pointed overwhelmingly in favour an independent contractor relationship between the driver and Uber. However, it should be noted that decisions are less certain where there are more complicated circumstances, such as where a purported contractor is obligated to work a set amount of hours and/or at a restricted location. In such circumstances, the FWC will still examine the totality of the relationship by considering the terms of the contract and the conduct of each party.

The FWC also acknowledged the recent Uber UK case of Aslam and others v Uber B.V and Others, where Uber drivers were confirmed to be ‘workers’ under UK legislation. The case did not help Mr Kaseris, though, as the FWC found that the differences between the UK and Australian legislation distinguished the case and made it not persuasive.

It will be interesting to see if this decision will prompt any legislative changes or review at the Federal Government level. The last Productivity Commission Inquiry into Workplace Relations, completed in December 2015, recognised the economic benefits of using independent contractors. This was reflected in their recommendation that employers should maintain their prerogative to choose whichever employment/contractor mix that is most suited to their business. However, the rise of the ‘gig economy’ as a significant industry may warrant a further review of the Fair Work Act provisions.

What is certain is that companies like Uber have carefully structured their operations to ensure that their drivers and couriers are genuine independent contractors under Australian law.

For further information on how the above may affect you or your business, please contact Michael Bishop.

Authors
2018-08-28T15:47:07+00:00 February 19th, 2018|Categories: Employment Law|Authors: , |