Got the gig? Litigation around the gig economy heats up

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The line between employee and contractor continues to be blurred in the gig economy. To avoid litigation, companies need to figure out how to classify workers.

Disenfranchisingworkers of their rights — is there an app for that? Quite possibly according to the Fair Work Ombudsman. Just last week it launched legal proceedings against a “gig economy” food delivery business, Foodora, on the basis that it treated its workers as independent contractors rather than employees.

The gig economy is booming, and businesses are either (or both):

  • embracing the changes – for example, facilitating the use of Uber instead of taxis; or using Airtasker instead of using traditional suppliers of labour; or
  • being challenged – for example, by being asked to deal with an increasing number of requests for flexible working arrangements, as their employees might want to “AirTask” assist someone in the morning, while leaving early to put in an Uber driving shift in the evening.

Many businesses are still considering whether they might be able to make use of the gig economy to better service their customers by quickly connecting them with the people who can provide assistance.

Contractors or employees?

However, the question of whether or not workers in the gig economy actually qualify as employees (and are entitled to superannuation, annual leave, and all of the other benefits that go with the status) has been bubbling for some time. One of the largest obstacles and uncertainties for the gig economy since its outset has been how it fits, if at all, into the existing system of employees and independent contractors.

In recent months, Uber has succeeded on two different occasions in arguing that its drivers are not employees for the purposes of unfair dismissal claims. But this has not stopped the Transport Workers Union from announcing in March 2018 that it would be supporting two Foodora delivery riders in bringing unfair dismissal claims of their own.

In 2017 the Federal Circuit Court issued a decision that served as a reminder to gig economy employers of the liabilities that employers may face. It ordered Z Transport Group to pay $72,000 as a penalty for engaging a bicycle courier as an independent contractor, when he was in fact an employee.

The Fair Work Ombudsman’s recent claim against Foodora is a test case which has been commenced to determine whether three of Foodora’s delivery cyclists and drivers are in fact its employees. The Ombudsman’s case is based upon the significant amount of control Foodora had over the workers’ activities. This includes the requirement that the workers wear Foodora-branded clothing and food storage boxes; that Foodora unilaterally decides the rates of pay for its workers; and the fact the workers only work for Foodora rather than publicly advertising their own personal delivery service.

If Foodora is unsuccessful in defending the Fair Work Ombudsman’s claim, it could find itself on the hook for hundreds of thousands (if not millions) of dollars in penalties and back pay, because further claims from its other workers would surely follow.

While the gig economy awaits for the outcome of the Foodora prosecution, what should your business be doing in the meantime (other than perhaps using any outstanding Foodora or Uber Eats gift cards in case it all comes crashing down)?

Check contractor arrangements

Even if you’re not a gig economy participant, check your employee contractor arrangements. The Fair Work Ombudsman has flagged that it’s now focussing on the issue of sham contracting and will not hesitate to go after businesses which attempt to avoid employment obligations by incorrectly engaging its workers as independent contractors. While some businesses use independent contracting arrangements as a historical convenience, this might come back to bite should an independent contractor relationship ever be tested in court.

Increase flexibility

Consider whether there’s any need or opportunity to increase the flexibility of your business’ working hours. Forcing everyone into rigid full-time or part-time working hours may not be as efficient or productive as allowing employees to work from home outside of normal office hours. With that said, if employees request a right to work flexibly, make sure you’re up to speed on the limitations of this right. Some employees may be surprised to learn that they cannot simply come and go as they please, or necessarily work 3 or 4 jobs at once.

Don’t be afraid to invest in technology

The world of tomorrow is here now. And while we might not all be as brave as Sydneysider “Meow-Ludo Disco Gamma Meow-Meow” (his real name), who had an Opal Card chip implanted into his arm (presumably to save precious seconds in terms of removing a card from his wallet), the opportunities to make use of new technologies to assist your workforce and to provide services to your customers may already be here or just around the corner.

Otherwise, we should all continue to watch this space. Major ramifications for the gig economy could be arriving in the months to come, and you want to ensure that your business is ahead of the curve! Maybe we should use Airtasker to get someone to help us with that…

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

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