In a first decision of its type, the Fair Work Commission held that a Deliveroo delivery rider was a person to whom the unfair dismissal provisions of the Fair Work Act applied. The Commission held that the Deliveroo rider was in fact an employee and not an independent contractor.
Diego Franco worked for Deliveroo for approximately 4 years. Deliveroo’s engagement documents made it clear that he was an independent contractor who was terminated on 30 April 2020. While Deliveroo claimed the reason for termination was that he delivered meals too slowly, records showed that he was only 20% slower than average delivery riders.
When Mr Franco commenced an unfair dismissal application, the preliminary question for the Commission was whether Mr Franco was an employee or independent contractor. Deliveroo filed a jurisdictional objection claiming Mr Franco was an independent contractor and not an employee, and that therefore the unfair dismissal regime did not apply.
As part of it claim that Mr Franco was a contractor, Deliveroo asserted that it did not control when, where or for how long Mr Franco would work during any time he was logged onto the Deliveroo rider app. He could also “multi-app” or work for multiple delivery companies at the same time (which he did with Uber Eats and Door Dash). The organisation claimed Mr Franco was an entrepreneur who could build goodwill with multiple food delivery operators as part of developing his own delivery business.
Despite this, the Fair Work Commission held that overall, “when standing back and looking at the engagement arrangement as a whole” the relationship was one of employer and its employee. Some of the reasons the Commission concluded this were:
- Mr Franco was presented as part of the Deliveroo business, by wearing a Deliveroo uniform and using Deliveroo branded equipment;
- the app system that organised shifts indirectly controlled the amount of time Mr Franco worked; and
- an app system that measured work performance in minute detail.
As for Deliveroo’s entrepreneurship claim, the Commission held Mr Franco wasn’t developing any “goodwill” as part of building his own business. In the end, the rider was not working or developing his own business as an “entrepreneur” but was working for Deliveroo’s business.
Commissioner Ian Cambridge held that although the overall picture of employment was impressionistic and imprecise, it was a compelling conclusion. Properly comprehended, Deliveroo’s level of control over Mr Franco’s work and work life strongly indicated employment rather than independent contracting.
As for the “multi-apping”, the Commission stated that while this detracted from the conclusion that the relationship was an employment relationship, when it is considered in the light of modern and rapidly changing workplaces (significantly altered by the COVID-19 pandemic), it did not sufficiently detract from finding an employment relationship.
After concluding that Mr Franco was an employee, the Commission went on to consider whether the dismissal was unfair. On this point, Commissioner Cambridge was scathing of Deliveroo’s method of termination through email for ‘slow deliveries’. Critically, Mr Franco was not told what delivery times were expected, nor that failing to meet them could result in termination. Further, “irrespective of whether Mr Franco was a contractor or an employee, it was plainly unconscionable to terminate what would be his primary source of income, without first hearing from him,” the Commission held.
Mr Franco sought reinstatement, and Deliveroo was ordered to reinstate him and compensate him for wages “lost or likely to have been lost” in the interim.
Lessons for employers?
The ruling has significant implications for gig workers in Australia.
Business operators must carefully consider when engaging workers as “contractors” (particularly as the “gig economy” grows) whether the relationship is really an employment relationship. Business operators must ask themselves, “Is the worker working for my business, or are they operating or developing their own business?”
The risks of sham contracting are clear and despite what the parties may call a contractor relationship, if, in the end, a Commission or court holds that the person was an employee, then for the whole period of the engagement, they will have been entitled to the National Employment Standard entitlements.
If at the time of engaging someone as a contractor, you are unsure whether the arrangement may in fact be an employment arrangement, contact us for advice on how to proceed. Properly identifying the basis for the engagement from the outset is an important risk management step for any business.
If you have any questions about this article, please get in touch with the author or any member of our Employment, Workplace Relations & Safety team(s).
This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.