Taken for a ride: Foodora rider found to be an employee

In a controversial decision, a single Commissioner of the Fair Work Commission has found that a delivery rider engaged as an independent contractor by food delivery company Foodora was, in fact, an employee.

The decision adds another piece to the puzzle that is the gig economy and will embolden unions and delivery riders to challenge engagement arrangements with incumbents such as Uber and Deliveroo.

The case

Foodora engaged the delivery rider as an independent contractor to collect food and drink from restaurants and deliver them to customers at their work or home – generally when hungover.

Foodora initially paid the delivery driver by the hour along with an additional payment on each successful delivery. Over time, that remuneration reduced so that the delivery driver only received a payment on each delivery.

After the delivery rider publically criticised Foodora for its deteriorating pay and conditions, Foodora terminated his services, ostensibly on the basis that he had breached confidentiality and hadn’t provided to Foodora control of a Telegram group thread that had hundreds of Foodora’s delivery drivers as members.

Supported by the Transport Workers Union, the delivery rider filed an unfair dismissal claim against Foodora. Foodora’s main defence was that the delivery rider was not protected by the unfair dismissal regime because he was an independent contractor, not an employee.

Decision

In finding that Foodora has unfairly dismissed the delivery driver, the Commissioner made the preliminary finding that he was also a Foodora employee.

In arriving of that decision, the Commissioner applied a multifactorial approach that considered a number of indicia.

In summary, the Commissioner assessed those indicia as follows:

• Foodora exercised a considerable amount of control over the manner in which the delivery rider performed his work. The Commissioner made special mention of Foodora’s ‘batch’ system of ranking delivery riders, which incentivised them to accept shifts at undesirable times.
• Even though the delivery rider was not required to work exclusively for Foodora, the Commissioner found that arrangement to be similar to a casual employee working various casual jobs.
• Although the delivery rider could select whether to accept shifts, if accepted, the start and finish times and location were set by Foodora.  Again, the Commissioner found that this reflected the manner in which casual employment was offered and accepted.
• The delivery driver did not incur many work expenses, did not require substantial skill and expertise to ride a bike, and did not make a significant capital investment into his business.
• Although the delivery driver was allowed to sub-contract out his delivery work (and in fact did), Foodora’s consent was required.
• Although the contract between Foodora and the delivery rider stated that the delivery rider was an independent contractor, many of its terms – for example in relation to rostering, wearing Foodora clothing, and compliance with policies and procedures – were similar to those in employment contracts.
• Foodora provided pay invoices to the delivery rider for his approval.  Further, it did not pay annual leave or sick pay.

Despite finding that the delivery rider was an employee, the Commissioner stated that it might be necessary to expand the orthodox assessment for characterising employees. The Commissioner also provided the following insightful commentary on his concerns with the gig economy:

If the machinery that facilitates contracting out also provides considerable potential for the lowering, avoidance, and/or obfuscation of legal rights, responsibilities, or statutory and regulatory standards, as a matter of public interest, these arrangements should be subject to stringent scrutiny.

Further, if as part of any analysis involving the correct characterisation that should be given to a particular relationship, an apparent violation of the law, or statutory or regulatory standards is identified, as a matter of public interest, any characterisation of the relationship which would avoid or minimise the likelihood of such violation should be preferred.

What’s next?

In our view, Foodora is unlikely to appeal the decision as it is currently in voluntary administration.

The decision will therefore likely remain and has already emboldened unions to continue challenging the present engagement arrangements. In particular, the National Secretary of the Transport Workers Union (which supported the delivery rider in this case) stated after the decision was handed down that ‘the fight does not end here’.

Further, if the judgment and sentiment in this Commissioner’s decision is any indication of the broader view among regulators, our take is that the stance against companies in the gig economy is hardening, and the benefits of engaging gig workers as independent contractors may soon come to an end.