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On 18 May 2021, the Fair Work Commission (FWC) made a ground-breaking decision in the case of an independent contractor driver for Deliveroo. The FWC found the Deliveroo driver was an employee and therefore was entitled to protection from unfair dismissal and other employment entitlements.

Why is the determination of employee important?

The classification of whether a worker is an employee or independent contractor brings substantial consequences. These consequences bridge into employment law, tort law and taxation law. Employees enjoy more rights and entitlements. For instance, they are protected from unfair dismissal, whereas independent contractors are not.

The current test used to determine whether an employee/employer relationship exists is the multifactorial test. The test addresses the flexibility of modern working arrangements as it seeks to balance a range of indicia by taking a holistic approach to a work relationship. What is most important, however, is that the indicia can be moulded to individual facts. As you will read, the FWC reached its landmark decision by application of this test to modern work arrangements.

Employee or independent contractor? 

 Commissioner Cambridge applied the multifactorial test to come to the determination of an employment relationship. Of particular importance, he considered the following:

  • The level of control Deliveroo possessed strongly supported the existence of employment
  • Mr Franco was required to present as a Deliveroo employee by wearing their branded clothing and equipment displaying their logo
  • Mr Franco was not provided any leave entitlements
  • Mr Franco was paid an amount per delivery
  • The program directed Mr Franco to undertake work at particular times and regularly make himself available for work
  • Deliveroo expressly permitted Mr Franco to work for any of its competitors.

Consideration of these factors led Commissioner Cambridge to make the determination that Mr Franco was a Deliveroo employee.

As Mr Franco was characterised as an employee of Deliveroo, Commissioner Cambridge could then consider whether he was unfairly dismissed, that is, whether the dismissal was harsh, unjust or unreasonable. It was decided that there was no valid reason for the dismissal and that Deliveroo’s decision to inform Mr Franco that he was dismissed via email was a failure to afford any procedural fairness.

The remedy 

Commissioner Cambridge ordered that My Franco be reinstated by Deliveroo, his lost earnings be paid and his continuity of service be recognised.

What does this mean, moving forward?

 Deliveroo has made known their intention to appeal Commissioner Cambridge’s decision to the Full Bench of the FWC.

Should Deliveroo’s appeal be unsuccessful, this decision will have far-reaching impacts on the current gig economy for Australia.

The determination that Mr Franco is an employee of Deliveroo will open the floodgates for further employment claims. Workers for other companies akin to the Deliveroo model may be entitled to protection from unfair dismissal under the Fair Work Act 2009 (Cth), as well as entitle them to minimum wage and other entitlements that employees have available to them.

 

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