Australia’s Fair Work Ombudsman finds Uber drivers are contractors: so what can unions do now?

An edited version of this post, including discussion of the “contractor model” of gig platforms, was published in The Sydney Morning Herald on 14 June 2019: ‘Employee or not? What the Uber decision means’

Australia’s workplace enforcement agency, the Fair Work Ombudsman (FWO), today announced the conclusions of its two-year investigation into Uber’s engagement of drivers.

In short, the FWO has determined that Uber drivers in Australia are independent contractors rather than employees.

So far, all that has been made public is a media release by the FWO rather than a full investigation report. The Ombudsman, Sandra Parker, stated as follows:

“The weight of evidence from our investigation establishes that the relationship between Uber Australia and the drivers is not an employment relationship.

For such a relationship to exist, the courts have determined that there must be, at a minimum, an obligation for an employee to perform work when it is demanded by the employer.

Our investigation found that Uber Australia drivers are not subject to any formal or operational obligation to perform work.

Uber Australia drivers have control over whether, when, and for how long they perform work, on any given day or on any given week.

Uber Australia does not require drivers to perform work at particular times and this was a key factor in our assessment that the commercial arrangement between the company and the drivers does not amount to an employment relationship.

As a consequence, the Fair Work Ombudsman will not take compliance action in relation to this matter.

This investigation related solely to Uber Australia and was not an investigation of the gig economy more generally.”

The FWO’s conclusion on the categorisation of Uber drivers is consistent with that reached in two decisions by the Fair Work Commission over the last 18 months (both rejecting unfair dismissal applications brought by drivers: Kaseris v Rasier Pacific V.O.F. [2017] FWC 6610; Pallage v Rasier Pacific Pty Ltd [2018] FWC 2579).

In contrast, the Commission determined in another unfair dismissal case that a delivery rider for Foodora (which has since exited Australia) was an employee: Klooger v Foodora Australia Pty Ltd [2018] FWC 6836 (discussed in this post from November last year).

Unions and others including the Australia Institute’s Centre for Future Work have sharply criticised the FWO’s announcement today (see for example this report in The Australian). The Transport Workers Union national secretary Michael Kaine told the newspaper:

“In jurisdictions around the world from London to New York and Los Angeles, Uber is being held to account and faced down despite its massive lobbying efforts and bullying. Yet in Australia today it has been given the green light to continue ripping riders and drivers off, sacking them without warning or the right to appeal and ignoring their pleas to be able to earn a decent living.”

Valid criticisms about the FWO’s conclusions can indeed be made, including that the agency has focused too much on the ostensible ‘freedom’ of Uber’s drivers to log on and on from the app and provide services when they wish – without enough attention being given to other aspects of the relationship enabling Uber to exercise control over drivers.

But with the writing seemingly on the wall on the categorisation issue, at least for these particular types of platform workers, there should now be more focus on what unions can do to represent Uber drivers outside the framework of protections for employees under the Fair Work Act.

There are overseas models, including the United States Machinists Union offshoot, the Independent Drivers Guild (IDG), which successfully lobbied New York City Council for minimum wage increases for rideshare drivers (see this January 2019 report from Business Insider on a legal challenge to the wage rises by the rideshare platforms Lyft and Juno).

The IDG along with Australian-based online collective group, Ride Share Drivers United (RSDU), and other union organisations around the world took part in a global 24-hour Uber log-off and ‘strike’ on 8 May this year (see this report in Vox).

Whenever we consider the prospect of independent contractors engaging in union-like activity such as this, anti-trust/competition law constraints inevitably arise. In the Australian context, small businesses may seek an authorisation from the Australian Competition and Consumer Commission (ACCC) enabling them to act as a group in negotiations with other commercial parties.

Such an authorisation might not necessarily be granted. However, the ACCC today announced the commencement of consultations on a new class exemption that would allow small businesses (potentially including independent contractors operating in the gig economy) to collectively bargain without breaching competition law (and without needing to seek an ACCC authorisation).

The Victorian Government has introduced legislation (currently before State Parliament) which would extend an information and dispute resolution framework for transport owner-drivers to those involved in food delivery work for platforms like Uber Eats. This is far from the comprehensive suite of rights afforded to employees under the Fair Work Act. On the other hand, it adapts an existing regulatory regime intended for one group of workers (self-employed truck operators) to a new group who may be found to have no rights at all (food delivery workers operating at least three vehicles which may include bicycles).

We need to get imaginative about what is possible in relation to the collective representation of platform workers, in the likely event that court and regulatory agency findings continue to deem them to be independent contractors. 

I’ll discuss this more in an imminent post summarising my recently completed paper comparing Australian and Italian developments, including the inspiring activism of self-organised food delivery rider groups in northern Italian cities.