Are Uber drivers employees or independent contractors? First Australian case points to independent contractors

In December 2017, we published an article considering how courts in the United States and the United Kingdom had treated Uber drivers – that is, whether they were considered employees or independent contractors. Since then, the Fair Work Commission (FWC) has handed down a decision that suggests that Uber drivers, at least in Victoria, might actually be independent contractors.

The issue

In Kaseris v Rasier Pacific V.O.F [2017] FWC 6610, the FWC in Melbourne was required to determine whether an Uber driver was entitled to unfair dismissal remedies. A copy of the decision can be accessed here.

In essence, Mr Kaseris alleged that his ‘employment’ was dismissed by Rasier (i.e. Uber) after he had failed to maintain an adequate overall rating. Uber alleged it simply terminated the ‘service agreement’, which it was entitled to do without notice because Mr Kaseris was an independent contractor.

Key facts

The key facts of the Uber driver arrangements in the US and UK decisions were considered in our previous article (which can be accessed here). However, it is critical to note two features of the arrangement in Victoria that differ from the arrangements in the US and UK (at least as considered by the cases):

First, the FWC noted:

Whilst a Driver is logged onto the application, he or she has complete discretion as to whether the Driver accepts a trip request from a Rider. The Respondent does not impose requirements or commissions on a Driver that, in order the use the application, a Driver must accept a minimum number of trip requests during the time in which the Driver is logged onto the application. This was not always the case. During the period from June 2016 to March 2017, a Driver would be automatically logged off the application and not be able to log back on again for two minutes if the Driver did not accept consecutive trips on three consecutive occasions. However, since March 2017, the two minute delay was removed so that Drivers could log back onto the application immediately.

Perhaps this was, in part, a response to the issues identified by the US and UK courts?

Second, the FWC noted that clause 2.4 of the service agreement prohibits a driver from displaying Uber’s name, logo or colours either by use of a uniform or any vehicle markings.

Otherwise, the facts specifically pertaining to Mr Kaseris were:

1. While he was a driver, he logged onto the Uber app at varying times for varying periods, on multiple occasions on some days and not at all on other days.
2. He provided varying numbers of trips while logged into the app, including providing no trips on some occasions even when he was logged into the app.
3. He did not accept 33% of the trip requests sent to him via the app (i.e. 2,961 of a total 8,877 sent) and cancelled 15% of the trip requests he had received and accepted via the partner app (i.e. 804 of the 5,542 that he had accepted).

Relevant legislation

As noted above, the FWC decision related specifically to whether Mr Kaseris was an employee for the purposes of obtaining unfair dismissal remedies under the Fair Work Act 2009 (Cth) (FWA). The relevant requirements are set out in section 382 of the FWA as follows:

382 when a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:

(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in    relation to the person in accordance with the regulations, is less than the high income threshold.

In Kaseris, the FWC commented at [44] that:

Section 380 makes clear that “employee” in Part 3-2 of the Act in which s.382 is found means a national system employee. However, in the case of an employee in Victoria, as Victoria is a referring State within the meaning of s.30B of the Act, the extended meaning of national system employee in s.30C applies. In effect, with the exception of a limited number of senior public servants and office holders in Victoria, person who are “employees” whether or not employed by a national system employer fall within the provisions of Part 3-2 of the Act.

The FWC’s comment at [48] is also relevant:

For there to exist an employment relationship, certain fundamental elements must be present. A contract of employment is, at its essence, a work-wages bargain, so that the “irreducible minimum of mutual obligation” necessary to create such a contract is an obligation on the one side to perform the work or services that may reasonably be demanded under the contract, and on the other side to pay for such work or services.

Decision

The FWC concluded Uber did not owe any legal obligation to its drivers except to provide access to the partner app and remittance of the fares and cancellation fees and, as a consequence, the wages-work bargain that is essential to employment relationship was therefore missing.

The FWC commented:

As the evidence plainly establishes, the applicant was free to perform as much or as little work with it as he liked. In providing a transportation service to riders, the applicant did so when, where and for whom he saw fit, without any further reference to the respondent. In the provision of the transportation service to a Rider, the applicant was not performing any contractual obligation he owed to the respondent. Secondly, the respondent did not make any payment to the applicant for the provision of any work or services. Rather, the applicant was charged a service fee by the respondent calculated as an agreed percentage of the fee paid by the rider.

For completeness, the FWC also cited the full bench decision of Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozaro [2011] FWAFB 8307 and applied the cascading tests, which include giving consideration to the various common law indicia identified in Stevens v Brodribb Sawmilling Co. Pty Ltd. The FWC concluded that Mr Kaseris was still an independent contractor even on those common law tests.

Impact

Mr Kaseris purported to rely upon the UK decision in Aslam and Others v Uber BV and others in which the Employment Tribunal of London concluded Uber drivers were employees rather than independent contractors (see our previous article here).

The FWC distinguished Aslam from the present case on the basis that the UK legislation is much broader and commented that the fact London Uber drivers fell within that extended definition was of ‘no assistance’ to Mr Kaseris.

The relevant section from the UK Act (as considered in Aslam) is as follows:

230 Employees, workers etc.
(1) In this Act “employee” means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.
(2) In this Act “contract of employment” means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.
(3) In this Act “worker” (except in the phrases “shop worker” and “betting worker”) means an individual who has entered into or works under (or, where the employment has ceased, worked under)—

(a) a contract of employment, or
(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;

and any reference to a worker’s contract shall be construed accordingly.
(4) In this Act “employer”, in relation to an employee or a worker, means the person by whom the employee or worker is (or, where the employment has ceased, was) employed.
(5) In this Act “employment”—

(a) in relation to an employee, means (except for the purposes of section 171) employment under a contract of employment, and
(c) in relation to a worker, means employment under his contract;
and “employed” shall be construed accordingly.

This test is quite different to the test under section 382 of the FWA.

Arguably, the UK legislation invokes consideration of issues not dissimilar to the tests in Australia for both workers’ compensation and taxation.

Therefore, despite this decision of the FWC, it remains to be seen whether Uber drivers are actually independent contractors or employees for the purposes of workers’ compensation and taxation law.

For further information, please contact a member of the Cooper Grace Ward insurance team.