Thinking | 3 June 2016
Uber drivers one step closer to workers’ compensation entitlements
Modern ride sharing services that can be accessed by the touch of a smartphone button present unique challenges for governments who regulate the taxi industry. Until recently such services were by default illegal in all Australian jurisdictions. However, the Australian Capital Territory changed this in late 2015 by passing the breathtakingly-named Road Transport (Public Passenger Services) (Taxi Industry Innovation) Amendment Act 2015 (ACT). For ease of reference we will dub it the Uber Act.
The Uber Act was originally going to commence on 24 May 2016. However, on 20 May 2016 the ACT Legislature passed a regulation delaying this to 2 August 2016.
Besides legalising Uber and other similar services, the Uber Act will make a bold attempt to extend the generous ACT workers’ compensation regime to ridesharing drivers. This seems to be a sensible idea. However, amending the scheme in this way is not as simple as it sounds. As a ridesharing driver you can use your own vehicle, choose your own hours and decide where you work. These are characteristics of independent contractors, not employees. The difficulty is that the ACT workers’ compensation scheme, like many others in Australia, does not apply to independent contractors except in very limited circumstances.
Who could make a claim prior to the Uber Act?
Under the Workers Compensation Act 1951 (ACT) any employee engaged under a traditional employment contract is covered by their employer’s workers’ compensation insurance policy (and can therefore make a claim if they are injured at work). However, without the Uber Act independent contractors can only make a workers’ compensation claim if their engagement is on a ‘regular or systematic’ basis.
The ACT Court of Appeal’s decision in Yaraka Holdings Pty Ltd v Giljevic (2006) 149 IR 339 interpreted this phrase as follows.
The term “regular” should be construed liberally. It may be accepted, as the Magistrate did, that it is intended to imply some form of repetitive pattern rather than being used as a synonym for “frequent” or “often”. However, equally, it is not used … as a synonym for words such as “uniform” or “constant”…The concept of engagement on a systematic basis does not require the worker to be able to foresee or predict when his or her services may be required. It is sufficient that the pattern of engagement occurs as a consequence of an ongoing reliance upon the worker’s services as an incident of the business by which he or she is engaged.
Therefore, although the definition of ‘regular and systematic’ is applied liberally by the courts, it still requires repetition of an engagement, which some Uber drivers may not be able to satisfy, depending on their patterns of driving.
‘Regular and systematic’ is (possibly) no longer necessary
Once it commences, the Uber Act will insert a new paragraph into the Workers Compensation Act 1951 (ACT) that will permit regulations to specify an individual to be a worker for workers‘ compensation purposes, even if not engaged on a ‘regular or systematic’ basis.
Although this does not target ridesharing drivers specifically, the Government expressly stated that by making the Uber Act, the intention was that ridesharing drivers would ‘be considered workers for workers’ compensation purposes.’
The Uber Act therefore will completely remove the requirement for a ridesharing driver to have been engaged on a ‘regular and systematic’ basis. However, the changes will also require that the worker be engaged under a contract that is ‘prescribed by regulation’. This is an important condition. It means their occupation will need to be specified in a regulation approved by the ACT Legislature before the ‘regular and systematic’ threshold will be completely removed.
What are the major issues raised by this change?
Although the Uber Act attempts to put the nail in the coffin in terms of extending compensation entitlements to ridesharing drivers, it may in fact create more complications than it solves. In particular, we foresee issues in relation to the regulations that will specify occupations (as required by the changes), ridesharing drivers crossing State borders and risk assessment for insurers.
Lack of regulations
The most obvious issue is that there are currently no regulations in place that would specify Uber drivers, let alone any other occupation, as a type of contract that does not need to be regular and systematic in order to be entitled to workers’ compensation benefits. This means that drivers will currently be required to satisfy the ‘regular and systematic’ test outlined by Giljevic in order to make a claim if they are injured at work.
The Territory’s last-minute delay of the Uber Act commencement may suggest that the necessary regulations are in the process of being finalised.
On a slightly unrelated note, it is unclear precisely what other occupations will be specified in the future. The range of workers that could potentially take advantage of the provision is increased by the use of the words ‘or similar contracts’. Ultimately, however, the contract would need to be similar to one mentioned in regulations, which do not currently exist.
State and Territory of connection issues are commonplace in the ACT workers’ compensation jurisdiction, which is well known for being more plaintiff-friendly to the scheme in bordering New South Wales.
The plain fact is that Uber drivers do not necessarily discriminate based on State and Territory borders, and cross-border ridesharing trips would not be uncommon with the neighbouring NSW city of Queanbeyan being only a 15 minute commute from the Canberra CBD or airport.
The situation for drivers who actually reside in New South Wales, but carry out most of their driving in the ACT, may be more complicated. In Fed Consulting Services Pty Ltd v Gelo (2014) 288 FLR 192 the ACT Supreme Court held that regular refuelling at a petrol station in New South Wales was persuasive in establishing that the worker usually worked in that State. What of the driver who resides and regularly fills their car with petrol in NSW in order to work as an Uber driver, but on an irregular basis, in the ACT?
Assuming that appropriate regulations are created, there is clear potential for an increase in State and Territory of connection disputes.
Uncertainty for insurers
Until now insurers only ever had to assess the risk of employees based on a ‘regular and systematic’ schedule of work. Although some drivers may have a history documenting where and how often they drive, this will not be the case for all. Worse, a ridesharing driver may in fact work for multiple ridesharing apps, or service providers.
Factors about a driver’s place of work (his or her car) also complicate the common law liability picture. Although companies like Uber have relatively high standards for the age of a vehicle used for transportation, Uber does not provide training or actively ensure the safe condition of a vehicle or that drivers operate safely. Some injuries would be covered by the driver’s (or Uber’s) CTP insurance policy, but others would not be. A driver may, for example, be assaulted by a passenger. Common law liability could exist in such a situation unless the ridesharing company takes reasonable precautions against obvious risks.
The result is significant uncertainty for insurers, which is likely to lead to higher premiums for employers.
The proposal to include ridesharing and other similar drivers in the ACT workers’ compensation scheme is novel.
However, the impact of the changes is, at this stage, not completely effective due to the lack of accompanying regulations and the delayed commencement of the Uber Act itself. On the other hand, it appears inevitable that the Territory will introduce regulations specifying that Uber and other related drivers should be covered by the ACT workers’ compensation scheme. While insurers may face some risk uncertainty in the future about this change, they would be wise to assess their underwriting policies now in anticipation of ridesharing organisations looking for workers’ compensation insurance in the near future.
For ridesharing companies who view their drivers as independent contractors and not employees entitled to workers’ compensation benefits, we caution that the end of that characterisation may be near.
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