Gig Workers and Employee Entitlements 1.0
In 2019, Australia’s Fair Work Ombudsman announced its findings that Uber drivers are not employees, but only independent contractors. While this two-year investigation was a result of wider concerns about worker exploitation in the gig economy, such as workers compensation, unfair dismissal protections and minimum wage entitlements, workers are still facing such risks with little opportunity for recourse through employment law. While there are some exceptions, because of the flexibility that gig workers often maintain over when and how they work, employment protections are not typically available to them. This trade-off was at the centre of the 2019 Fair Work decision.
Employment Protections: Employee or Contractor?
While there are general distinguishing features of employees and contractors, some professions such as labourers and apprentices are always considered employees, and other times the contract stipulates whether an individual is an employee or a contractor. In Australia, it is illegal to treat employees as contractors, as it is wrongful failure to withhold tax, pay super, and report and pay fringe benefits tax.
Generally, employees:
- Cannot delegate or subcontract their work;
- Are paid for the time worked, per item/activity, or on commission;
- Are provided with equipment and tools by their employer or are paid for providing it themselves;
- Do not undertake commercial risks;
- Do not maintain control over the way in which work is done; and
- Do not operate independently of the employer.
Conversely, contractors:
- Can delegate or subcontract their work;
- Are paid for a result achieved, which can overlap with the way that employees are paid in terms of method;
- Provide their own equipment and tools and are not paid by their hirer for providing it;
- Take commercial risks;
- With respect to the contract, maintain control over the way in which the work is done;
- Operate independently of the hirer’s business.
On the face of the matter, classifying gig workers as contractors makes sense; they are paid per trip or delivery, provide their own vehicle, and are in control of how and when they drive or ride. Most enjoy this flexibility. However, the extent to which drivers and riders operate independently is impacted by their ability to control wages and working conditions. In Australia, the control of gig workers in this regard is limited – and this is met with limited employment protections.
The Gig Economy in 2020 and Beyond
After a year of layoffs and salary reductions across corporate Uber, one may be forgiven for assuming that investments in the welfare of their drivers will not be at the forefront. However, the need for improvements has arguably become more evident than ever. Uber drivers, while facing a reduced workload in the face of people staying home due to COVID-19, have also provided an essential service during a pandemic for necessary trips where public transportation poses a heightened risk. Uber Eats delivery drivers and riders brought food to those who couldn’t leave their homes for safety or isolation reasons, and even supported grocery delivery services such as Woolworths. It has become clear that gig workers are providing services that are widely needed, and in pandemic times, are putting themselves at risk in the process.
While there is some general agreement on the need for protections or regulation, how individuals, companies, and public officials propose to do this is a mixed bag. In the United States, Uber CEO Dara Khosrowshahi sought for a third option of worker classification outside of the current options of employee and contractor. On the other hand, Uber Eats has newly introduced a contract that more clearly classifies drivers and riders as contractors rather than employees. In the midst of this, a Senate inquiry has recently been proposed by Tony Sheldon, an Australian Labor politician, to delve into why drivers and riders are not employees of Uber Eats. At the same time, Australian employment lawyer Andrew Rich has also called for better regulation of those who are classified as contractors.
While there is no clear answer as of yet, the gig economy is sure to spur some development in Australian employment law. This is an interesting and important area to follow, particularly as the Senate inquiry gets underway.