The constant issue of not having a clear definition of what is an “independent contractor” in the Fair Work Act 2009 (Act) has reared its ugly face again as a landmark decision against Foodora was handed down. Commissioner Cambridge found that a Foodora driver should be considered an employee whilst applying the multifactorial test.
The Commission found that in the case of Klooger v Foodora (Klooger v Foodora Australia Pty Ltd [2018] FWC 6836 (16 November 2018)) wherein Klooger a rider filed an unfair dismissal claim that he was deemed to be an employee. The (now in administration) Foodora not surprisingly filed a jurisdictional objection supporting their view that the relationship was of a contractor and principal. If Foodora were successful in their objection the application could not be heard.
The Commissioner viewed the service contract which made it very clear the intention was for it be an independent contractor relationship, however, the contract had a “considerable capacity to control” a fundamental factor in determining whether there is a contractor relationship the service contract also included provisions regarding:
- Rostering
- Acceptance of jobs
- Fixed start and finish times
- Requirement to comply with policies and procedures
- Specific nature of engagements to be undertaken
- A clause that says “any references to employees is a reference to contractors”
The interesting thing about this case is that although it fundamentally involved an unfair dismissal matter and whether a dismissal of a worker was harsh, unjust or unreasonable – there was a decision to be made on Klooger’s ability to claim as an “employee”. A test which is borne out of common law in an industry that has been disrupted to an extent that employment legislation has still not caught up.
In Klooger’s case the employee was classified as an employee and there are several conditions of note:
- The rider was paid on an hourly basis
- The rider was also paid per each delivery made
- The rider was required to use a Foodora branded delivery container and wear Foodora branded clothes
- The rider was paid by Foodora not its customers
- Foodora also used a system called “batching” wherein shifts were allocated to delivery riders only the “best shifts” would be allocated to and given to top ranked riders (ranked by way of performance and other characteristics)
- Foodora presented regular pay invoices to the driver for approval and paid them if they agreed with them
As such because there was now jurisdiction the other facts of the case led to a more predictable result that the dismissal was harsh namely because:
- The real reason for his dismissal was that he made public complaints about Foodora’s treatment of workers
- Klooger was entitled to protection for raising concerns about working conditions. This was not a valid reason for dismissal
- Procedural fairness was denied. He had no opportunity to respond to allegations about no handing over control of a chat group Klooger had designed (there was a claim this was intellectual property)
- He was dismissed by email and with no prior warning.
Compensation was awarded of 26 weeks pay (almost the full compensatory remedy under the Act – although it deduct monies from other employment.
What is the real lesson from this?
In my view, this is not quite the matter that will disrupt the disruptors engaging in contracting. I am sure Unions may well see this as a landmark case to sink their teeth into however there is no doubt that Foodora’s business model required more control over the riders than other apps such as Uber. Whilst Foodora wanted much more control, Uber and Deliveroo have focused there structure on being a support services platform, that is, the workers are using the platform to find customers to get paid. Such a structural argument may well put them out of the jurisdiction of workers looking to file an unfair dismissal or (general protections) claim for want of jurisdiction.
There is no doubt that legislation changes are required to provide some certainty for employers, the Commission have even hinted at this the Commissioner did note that “there may be a need to expand and modify the orthodox contemplation for the determination of the characterisation of contracts of employment …….as the changing nature of work is impacted by new technologies”[1].
For technology start ups and companies who engage contractors on a regular basis it’s important to get the right advice on contracting in Australia as it may save thousands of dollars in penalties and compensation and terrible PR cases like this attract.
Written By
Principal
NB Lawyers – Lawyers for Employers
About the Author
Jonathan Mamaril is the principal and director of NB Lawyers, the lawyers for employers, and a specialist in employment law. Over the last ten years, Jonathan has helped hundreds of employers understand their legal requirements, mitigate risk and liability, protect their reputation and achieve their goals for business growth and expansion.
[1] Klooger v Foodora Australia Pty Ltd [2018] FWC 6836 (16 November 2018) at 103