Deliveroo decision means “lack of clarity” on independent contractors: Employsure

The ruling by the Fair Work Commission that a worker for food delivery company Deliveroo is considered an employee, rather than an independent contractor has drawn confusion among stakeholders, with workplace relations advisor Employsure seeking further clarification as to what “independent contracting work” actually entails. The firm believes that the Fair Work Commission’s decision could lead to more employers being caught out.

“The difference between an independent contractor and an employee is not always clear cut,” Employsure Business Partner Josh Paterson said. “The relationship between an employer and employee is a contract of service, whereas the relationship between an employer and independent contractor is a contract for services. The differences are subtle but important.

“This shows there is a grey area of law that businesses need more certainty on when hiring workers,” Paterson added. “While this decision only focuses on the gig economy, many other businesses, like those in the construction and mining industries, are increasingly relying on independent contractors. What we need to see is a more clear-cut definition of an independent contractor enshrined in law, similar to the definition of casual employment outlined in the recent amendments to the Fair Work Act.”

The Fair Work Commission pointed out in its ruling that the worker did not build a business or brand as a rider, he did not have a clear profession or assets, he booked shifts in advance through Deliveroo’s systems which preferenced shift allocation on the basis of performance metrics, and he was required to dress in the company’s branding, all of which prompted the body to conclude that the worker an employee rather than an independent contractor.

Currently, the gig economy now accounts for more than seven per cent of the Australian workforce and ruling, some argued, mean significant changes wherein more employers possibly be caught for “incorrectly” represented to their workers the nature of the relationship between them

Employsure noted that in the case of Deliveroo, the ruling could see a raft of backpay claims ordered against it if more riders are ruled as employees in the future, such as an employee can claim unpaid wages and entitlements for up to six years from the date they became due.

Conversely, food delivery company Menulog plans to make all of its workers employees over the coming years by applying for a new employment award created for food delivery drivers specifically.

“The gig economy is one of the fastest growing sectors in the country, and many Australian workers enjoy the flexibility and the opportunity to make the money the industry presents them,” Paterson said. “This plan by Menulog to convert its workforce to employees will cost more, and it will undoubtedly set a precedent that will affect other business owners who hire independent contractors.

“This is an uncertain time for employers as they try to figure out the parameters of this working model,” Paterson added. “If business owners engage independent workers, they should get professional advice so they know exactly where they stand, or risk legal action.”