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The uber difference between a contractor and an employee

Author: Robert Lamb
3 min read
13 September 2019

Key Takeaways

  • A look at a recent investigation into an unfair dismissal case against Uber Australia
  • A look at the difference between a contractor and an employee
  • The importance of reviewing agreements

The difference between an independent contractor and employee is not always black and white, as is evidenced in a recent Fair Work Ombudsman investigation into Uber Australia.

Following my recent blog regarding the difference between a contractor and an employee, the Fair Work Commission (FWC) has recently handed down a decision confirming that at least in the case before it, it was found that the Uber Eats driver was not an employee but rather an independent contractor.

The driver brought an application for unfair dismissal alleging she was employed by Uber on the basis that:

  • She was required to open an Uber account and have a vehicle registered in her name;
  • Uber supplied her with a delivery bag;
  • She did not supply any specialist equipment;
  • Training was provided to her by Uber;
  • She was not required to have an ABN;
  • Uber used its ratings systems to exert control over her work and how it was performed. For example, if her ratings fell below 85% then her access to the Uber app would be cancelled; and
  • She had to undertake the work personally and could not subcontract the work out.

Uber Eats rejected that the driver was an employee on the basis that:

  • She had no employment relationship with Uber Australia;
  • She was a “Delivery-Partner” who intermittently used Uber software to receive requests for food delivery services on behalf of the restaurants;
  • She was under no obligation to sign-on to the App, or when logged on, to accept any delivery request;
  • Uber Eats did not pay the driver but rather acted as a limited payment collection agent to permit the Restaurant to pay the driver;
  • There was no “work-wages” bargain between the driver and Uber Eats; and
  • The terms of the Services Agreement defined the relationship as being a business relationship – not one of employment – and this should be given effect to if any ambiguity as to the nature of the relationship exists.

Commissioner Hampton considered previous decisions of the FWC dealing with the Uber business model and found on balance that the driver was an independent contractor and not an employee as:

  • All things being equal, while Uber did exercise “soft control” ultimately the driver had very significant control of when she logged on and off the Uber App;
  • The driver had control over her hours dedicated to the task;
  • She could accept or refuse delivery requests at her will;
  • She was free to choose her vehicle and how she operated it;
  • She was not restricted to just work for Uber; and
  • The driver provided almost all of the equipment required to provide the services.

As this case demonstrates, this is a complex area of the law and unfortunately there is no black and white answer.  

Each case turns on its own facts and the legal position as to whether or not a person is a contractor or employee may not actually be known until a Court or Tribunal (or the Australian Taxation Office) makes a finding for that particular matter. 

To make matters more complicated, if it is found that someone is legally designated incorrectly, then the employer (if that is what they are) may be liable for the employee’s unpaid tax and superannuation or be liable for damages if they injure themselves.

We have been advising clients on this area of the law for more than 30 years and can advise parties as to their legal rights and obligations under existing or new arrangements and also advise businesses on how to best engage employees or contractors.

We have extensive experience in drafting these agreements to suit businesses and their requirements.

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.

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