Fair Work Ombudsman concludes investigation into Uber and discontinues Foodora prosecution

Following a spate of recent announcements by the Fair Work Ombudsman, it seems the employment status of workers in the gig economy will continue to avoid the judicial scrutiny that many had sought.

On Friday 7 June 2019, the Fair Work Ombudsman announced the completion of its investigation into Uber Australia Pty Ltd, and its engagement of drivers.

Sandra Parker, the Ombudsman, said “The weight of evidence from our investigation establishes that the relationship between Uber Australia and the drivers is not an employment relationship.”

In a further development, the Ombudsman has since announced on 21 June 2019 the discontinuation of its sham contracting litigation against Foodora. Ms Parker noted, “it is highly unlikely that the FWO’s court action against Foodora would result in any additional payments being made to workers, or any financial penalty being imposed or recovered from Court proceedings.”

Ms Parker continued, “It is very disappointing for the Fair Work Ombudsman to discontinue this matter because the question of whether Foodora delivery workers were employees or independent contractors was an important matter for a Court to consider.”

As we’ve previously discussed, unions and app-based gig workers have been agitating for some time now for improvements in conditions by gaining recognition for these workers as ‘employees’ rather than ‘independent contractors’.

The Gig Economy in the Commission

The Ombudsman’s Uber decision will not come as a particular surprise to Uber given its success in the Commission in arguing that their driver partners are independent contractors in unfair dismissal cases involving Mr Michail Kaseris and Mr Janaka Pallage in 2017 and 2018.

In contrast, the Foodora announcement comes off the back of a successful unfair dismissal claim in the Commission by Foodora rider, Mr Josh Klooger. This claim succeeded principally because Mr Klooger was able to establish that he was an ‘employee’.

In these cases, the Commission has applied the multi-factor test as outlined by the Full Bench of the then Fair Work Australia in Jiang Shen Cai t/a French Accent v Rozario [2011] FWCFB 8307 in determining whether an employment relationship exists.

The multi-factor test

This multi-factor test consists of an examination of a number of factors, such as:

• Whether the employer exercises control over the manner in which work is performed, place or work, hours of work and the like;
• The ability of the worker to delegate and subcontract; and
• Whether the worker is an emanation of the business (i.e. uniform or company branding).

In their Uber press release, the Ombudsman appears to place particular emphasis on the control factor of the test in deciding that Uber drivers are not employees, going as far as to say “For such a relationship to exist, the courts have determined that there must be, at a minimum, an obligation for an employee to perform work when it is demanded by the employer.” They also appear to have made such a determination across the entire class of Uber drivers, rather than on a case-by-case basis.

Many people have welcomed the Fair Work Ombudsman’s announcement as a sensible confirmation of the multi-factor test. However, employers should note that:

• the factors to be considered extend beyond just the question of control. While employer control will be indicative of an employment relationship, it is not determinative, and therefore all relevant factors should be considered; and
• each individual relationship should be assessed individually in determining whether an employment relationship exists.

The further Foodora announcement indicates that, while the Ombudsman may not have an appetite to pursue Uber, she is interested in pursuing a further a test case for another gig economy company to gain higher level judicial consideration of the gig economy question beyond the Fair Work Commission for a larger class of workers.

Is it over?

Ultimately, the Ombudsman is not a judicial body and the Ombudsman’s Uber decision is merely a statement of policy. It has no binding effect. It simply means that the Ombudsman has decided not to investigate or pursue any potential action against Uber Australia for the time being.

The two main risks to the current status quo test being overturned are a change to the test as we know it by the High Court, or via Act of Parliament.

Following a Coalition victory in the Federal Election, and this announcement, it seems as though there are unlikely to be any serious risks to Uber’s current business model for the foreseeable future. However, with the union movement continuing to agitate a change of the law around this issue, a shift to this status quo could simply be one strong test case, or change of government away.

If you require assistance confirming whether someone is an employee or independent contractor, we can help. Call 1800 572 679 to speak with one of our workplace relations advisors.