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Uber Drivers – Employees or Contractors?

Key point: Recent FWC Uber case confirms traditional tests continue to apply in determining whether a person is an independent contractor or an employee.

Many cases have highlighted the difficulty with determining whether a worker is an employee or an independent contractor. It has become even more difficult with the introduction of ‘digital’ and ‘gig’ economies that do not fit the traditional definitions of work. However, a recent Fair Work Commission decision considered the employee versus independent contractor debate when faced with an Uber driver who claimed he was unfairly dismissed from his employment.

The Case

In December 2017, the Fair Work Commission (‘FWC’) confirmed that Uber drivers were independent contractors in the decision Kaseris v Rasier Pacific V.O.F [2017] FWC 6610 (‘Uber case’). The FWC held that the traditional tests of employment law will continue to apply until the law of employment evolves to catch pace with the evolving nature of the digital economy.

The Facts

The Uber case involved Mr. Kaseris applying for an unfair dismissal remedy after being dismissed from his alleged position of ‘employment’ with Uber. In response, Uber argued that Mr. Kaseris was engaged as an independent contractor, not an employee, and was therefore not protected from an unfair dismissal remedy under the Fair Work Act 2009 (Cth) (‘FW Act’). Accordingly, the Commissioner was required to look at the indicia of the relationship to determine what the true arrangement between the two was.

The Law

In cases where a question arises as to whether a worker is an employee or an independent contractor, the courts have developed a multi-factorial approach, in which there is no single decisive criterion, to determine whether a contractual relationship is one of employment or one of contract for services. Instead, certain fundamental elements and indicia must be present to establish that an employment relationship exists.

The Decision 

In the Uber case, the Commissioner noted that 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. In applying the established case law principles, the Commissioner found that the following indicia were present in Mr. Kaseris’ case:

  1. Mr. Kaseris had complete control over the way in which he wanted to conduct the services he provided;
  2. Mr. Kaseris was required to provide his own capital equipment;
  3. Mr. Kaseris did not and was not permitted to display any of Uber or its affiliates names, logos or colours on his vehicle;
  4. Mr. Kaseris was required to register for GST and remit all tax liabilities; and
  5. Mr. Kaseris did not receive a wage but rather received a proportion of the fee charged for the trip.

Accordingly, the Commission accepted Uber’s argument that by considering the lack of the wages-work bargain together with the provisions in their Services Agreement, an employment relationship did not exist.

The Lessons

This case confirms that the traditional ‘consideration of the indicia’ approach continues to apply in determining whether an employment or independent contractor relationship exists. The consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in a given situation. Instead, it is a matter of examining the overall relationship, with reference to the various indicia, on a case by case basis. The weight or importance given to the different indicators is not always equal and therefore, for the timing being at least, the challenges with the employee versus independent contractor debate would seem to remain.

The Importance of the Decision

At Adams Wilson Lawyers, we frequently come across employment arrangements disguised as independent contractor agreements. Sometimes this can be an intentional act by the employer and in others, it is an unfortunate result of businesses not understanding the intricacies of the employee versus independent contractor debate. Getting it wrong can mean significant claims for employee entitlements, such as allowance and penalties, sick leave, annual leave, superannuation and long service leave.

For Employees: if you are told that you are an independent contractor but you think you may actually be an employee, or if you are genuinely unsure as to the true nature of your engagement, get in touch with us today to find out. You may be able to recover unpaid entitlements under the FW Act if your circumstances show that you are in fact an employee.

For Employers: Just because you engage with an individual who says that they want to provide services to your business on an independent contracting basis, doesn’t mean that this is a true reflection of the work relationship at law. Particularly in circumstances where you have engaged the services of the individual on a repeated and regular basis over a reasonable period of time, you should double check to make sure your business is adequately protected. While you may not always be able to prevent an Uber type case from occurring, there are practical steps you can and should take to minimise your risks. To find out more, get in touch with one of our Employment Law lawyers today.