The Fair Work Commission recently held that an Uber Driver was an independent contractor and not an employee for the purposes of an unfair dismissal claim. This decision will affect all those involved in the emerging “gig economy”, where workers engage in job for-hire tasks through forums such as apps.  

Kaseris v Rasier Pacific V.O.F [2017] FWC 6610

Facts

Mr Kaseris worked as an Uber driver from August 2016 until August 2017. His account was deactivated by Uber due to poor ratings and he subsequently filed an unfair dismissal claim. Uber argued that Mr Kaseris had no claim as he was not an employee because the terms of engagement agreement and the lack of a work-wages bargain meant that there was no employment relationship.

Mr Kaseris had entered into a services agreement with Uber which allowed him to use the software to connect with members using the service.  The service agreement included a term that the relationship between the parties was solely as independent contractors. Drivers pay a service fee for each transaction for using Uber services per transaction.  Drivers are also able to provide trips however they deem appropriate, and are prohibited from wearing a uniform or displaying Uber’s logo or colours.

The work-wages bargain

Deputy President Gostencnik said that for an employment contract to exist there must be a work-wages bargain, which is the “irreducible minimum of mutual obligation” needed to make up an employment relationship. The  worker has an obligation to perform work or services as reasonably demanded under the contract, and the employer has an obligation to pay the worker for their work or services.

It was held that the work-wages bargain was not satisfied in Mr Kaseris’ relationship with Uber. Uber had no legal obligation to pay Mr Kaseris except to provide him with access to the app and remittance of fares and cancellation fees that are paid by the passenger.  Mr Kaseris in turn was not obliged to perform any work for the benefit of Uber, being able to provide services to passengers whenever and to whomever he saw fit.

The multi-factorial approach

The FWC applied the multi-factor test when determining if Mr Kaseris was an employee or an independent contractor. The main factors determining that he was not an employee are as follows:

• Control: Mr Kaseris had control over the manner in which he performed his services and could log on and off at any time he wished. He was able to refuse trips and was in control of operating his vehicle. Uber has some level of control over drivers through its service agreement however this was outweighed by the level of control that Mr Kaseris possessed.
• Equipment and uniform: The vehicle used was owned by Mr Kaseris and he carried the costs of registration and insurance. He did not wear a uniform or display the Uber logo.
• Taxation: Mr Kaseris was required under the Service Agreement to register himself for GST and remit all tax liabilities. His income was not subject to PAYG tax and he did not receive a wage.   
• Charging of Fares: Mr Kaseris said he was not an independent contractor because he was unable to charge a higher fare. The service agreement only permitted him to charge a lower fair. Deputy President Gostencnik stated this factor was outweighed by other factors.

Decision

Deputy President Gostencnik determined that Mr Kaseris was an independent contractor and therefore not entitled to unfair dismissal protections. His application was dismissed. He was also not covered by a range of other employment protections such as award minimum conditions and the right to be represented in enterprise bargaining.

Outdated laws

When delivering the outcome, Deputy President Gostencnik acknowledged that the multi-factor test may be outdated and “no longer reflective of our current economic circumstances” in the emerging gig economy. However he noted that until laws are developed to refine traditional employment structures or to broaden protections for those involved in the digital economy, “the traditional available tests will continue to be applied.”

Whether Uber drivers are employees is an issue of worldwide contention. There have been conflicting decisions in the United Kingdom and the United States in deciding whether drivers were employees entitled to protections.

Mr Kaseris tried to rely on the UK decision in Aslam and others  v Uber and others [2017] IRLR 4 (ET), where the Uber drivers were held to be employees. However this argument was rejected by the FWC and held to be of no assistance to his case due to the differences in UK and Australian legislation in their definitions of “worker contract” as against “employment contract”.  In the UK legislation, a worker is broadly defined, beyond being a person employed under a contract of employment.  The definition also includes an individual that worked under a contract where they undertake to do personally any work or services for another, who is not under a client or customer of a business undertaking by the individual.  The Aslam case only addressed this broad definition, not the traditional “contract of employment” test. 

A Select Senate Committee on the Future of Work and Workers is examining the impact of technological and other change on the future of workers in Australia. The report is due by 21 June 2018.  It is expected that submissions will address the new revenue generation and sharing arrangements and power sharing between the participants in the gig economy.

Contact Peter McNamara for your workplace law advice today.

Read the full decision of Kaseris v Rasier Pacific V.O.F [2017] FWC 6610 click here.