Contractors & unfair dismissal: recent case law. Uber vs. driver
Uber driver fails to convince Fair Work Commission of employment relationship
In a recent decision of the Fair Work Commission,1 an Uber driver was found to be an independent contractor and not an employee, meaning that he was unable to bring a claim of unfair dismissal.
The Fair Work Commission’s (FWC) Deputy President Gostencnik recently rejected an Uber driver’s claim that he was an employee, upholding Uber’s argument that the driver was instead an independent contractor.
The decision was made in the context of an application by an Uber driver, Michail Kaseris, under section 394 of the Fair Work Act 2009 (Cth) for an unfair dismissal remedy. The application was made after Mr Kaseris had his access to the Uber app, which drivers use to accept rides, deactivated on the basis of a low driver rating.
Mr Kaseris, who was self-represented, argued that the FWC should follow a recent decision in the United Kingdom, in which the Employment Tribunal upheld an earlier ruling which rejected the argument that Uber drivers were self-employed and not entitled to basic workplace rights.
Uber’s response: the Service Agreement and a multi-factorial approach
In response, Uber contended that the lack of any employment relationship was supported by a number of terms in its Services Agreement, which sets out the terms and conditions governing the relationship between drivers and Uber, and included the following provisions:
- Uber was not a party to the “direct business relationship” between drivers and passengers.
- Drivers have a right to use other “software application services” to perform as much work as they like, to charge less than the minimum fee, and to engage in “any other occupation or other business.
- In return for Uber providing drivers with certain services, drivers agree to pay Uber a “service fee” on a per transportation basis calculated as a percentage of a given fare.
Uber pointed to these provisions in the Services Agreement as indicating the absence of any “wages-work” bargain, which it said was an essential factor in any employment relationship.
While Uber argued that “on this point alone”, Mr Kaseris’ application should fail, it also argued that the multi-factorial approach developed by courts and tribunals to determine whether an individual is an employee weighed against there being an employment relationship between Uber and Mr Kaseris. This was because Mr Kaseris:
- did not and was not permitted to display any Uber branding on his vehicle;
- was not required to wear a uniform; and
- was required to provide his own equipment (including vehicle, smart phone, and wireless data), maintain his own car insurance, and manage his own taxation affairs.
Additionally, Uber did not make any superannuation contributions on behalf of Mr Kaseris, nor did he accrue any leave entitlements.
The FWC confirmed that the elements of an employment relationship were absent
Deputy President Gostencnik stated that he considered it “clear on the facts” that the fundamental elements of an employment relationship were absent from the relationship between the parties.
In arriving at his determination, the Deputy President noted that Mr Kaseris was not required, either under the Services Agreement or under any other agreement between the parties, to perform any work or provide any services for the benefit of Uber. Instead, Mr Kaseris was free to perform “as much or as little work as he liked”, working “where and for whom he saw fit, without any further reference to [Uber]”. In addition, Uber did not make any payment to Mr Kaseris for the provision of any work or services. Instead, Mr Kaseris received a proportion of the fee charged for a trip. This meant that the work-wages bargain — the “minimum mutual obligation necessary for an employment relationship to exist” — was “plainly absent”.
The Deputy President also agreed with Uber that the multi-factorial approach developed by courts and tribunals to determine whether an individual is an employee weighed against there being an employment relationship. In doing so, the Deputy President made the following observations about how the multi-factorial test should be applied:
“However, a consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture of the relationship from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details…”
The Deputy President also observed that the ultimate question to be answered, applying a decision of a Full Bench of the then Fair Work Australia,2 is:
“whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part?”
Mr Kaseris’ submission that the FWC should follow the decision of the Employment Tribunal in the United Kingdom was rejected. That decision applied a statutory definition of a “worker” which went beyond the meaning of an employee at common law. For this reason, the decision was of no assistance to the FWC.
The Deputy President concluded that there was no employment relationship between the parties, with the consequence that Mr Kaseris was unable to bring a claim for unfair dismissal.
The suitability of traditional tests to changing work relationships
The Deputy President did, however, note that the work-wages bargain and the multi-factorial approach used by courts and tribunals had developed and evolved at a time before the new ‘gig’ or ‘sharing’ economy, and consequently, it may be that these notions were “outmoded” and “no longer reflective of our current economic circumstances”.
While the Deputy President raised the possibility of the legislature “develop[ing] laws to refine traditional notions of employment or broaden protection to participants in the digital economy”, he emphasised that “until then, the traditional available tests of employment will continue to apply”.
Bottom line for employers
- Employers should be aware that there is an increasing tension between the rise of the gig economy and the traditional tests used by courts and tribunals to determine the existence of an employment relationship.
- While any new legislative or common law developments may affect an organisation’s obligations, the traditional tests used by courts and tribunals will continue to apply. This means that courts will look at multiple factors to determine the existence of any employment relationship.
- The engagement of drivers by Uber is under very specific terms, and structured in a way which would make it difficult for any tribunal applying common law principles to find the existence of an employment relationship. The outcome may not necessarily be the same for other players in the gig economy.
1 Kaseris v Rasier Pacific V.O.F.  FWC 6610
2 Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario  FWAFB 8307