What are the rights of workers in the gig economy?

gig economy workers rights

The gig economy has become an integral part of daily life, especially during the COVID-19 pandemic. It is easier than never before to gain access to services at the click of a button. However, the labour rights of workers in the gig economy are being compromised for greater consumer convenience and sustained profitability of billion-dollar companies.

What are the issues with gig economy work?

Gig economy companies continue to argue that workers do not want to be employees because they value having freedom in deciding their work hours, which can be beneficial where they have other commitments such as study or caring responsibilities. However, this flexibility is at the price of employment rights. Gig economy workers are deprived of safety protections, minimum wages, paid sick leave, compensation for work injuries, and remedies for unfair dismissal.[1] Gig economy companies are exploiting legal loopholes which permit them to profit from independent contractors without assuring them of basic labour rights.

As of 2021, there are 100,000 gig transport workers in Australia.[2] Gig transport workers on average earn wages lower than the national minimum standard. Delivery drivers earn on average $10 per hour after costs, according to a 2020 study by the Transport Workers Union. As explained by Michael Kaine, National Secretary of the TWU: “In the gig economy, for delivery riders, you get the worst of both worlds: the pay is low, and it’s piecework. When you put those two things together, you have a situation where riders have to work longer or faster to earn a meaningful income.” Between September and November 2020 alone, five delivery drivers died on New South Wales roads.[3] Five deaths in one state over two months is a shocking statistic and highlights the urgent need for reform in this area.

Should gig workers be classified as ‘employees’?

Independent contracting arrangements can be genuine and may offer a high level of flexibility. In some cases, the relationship between the worker and the gig economy company will be best classified as an independent contracting relationship.

On the other hand, some workers in the gig economy may be misclassified as independent contractors when they are actually employees.[4] This is illegal and called ‘sham contracting’. Sham contracting is protected by General Protections provisions in the Fair Work Act 2009 (Cth), and workers who are found to have been a victim of sham contracting can lodge a General Protections application to the Fair Work Commission and seek backpay of the entitlements they ought to have received as an employee. Factors that point towards a worker being an employee include:

  • An obligation to accept work
  • Wearing a company uniform
  • Using a company vehicle, including a bike
  • Fixed shifts
  • Needing to perform the work themselves, without the option to subcontract to someone else.

Therefore, it is appropriate to consider the circumstances of the working relationship to determine whether the worker is an employee or an independent contractor, and this can be particular to certain gig economy companies.

For example, on 13 September 2021, the Amsterdam District Court ruled that Uber drivers are employees, not independent contractors. The court deemed that Uber is a taxi company and its drivers are employees and thus entitled to the same employment rights as taxi drivers under local laws. These benefits include higher wages and rights in the event of illness or dismissal.

Uber has indicated that they will seek to appeal the decision and do not intend on employing drivers in the Netherlands. Maurits Schönfeld, Uber General Manager of Europe, stated, ‘We are disappointed with this decision because we know that the overwhelming majority of drivers wish to remain independent. Drivers don’t want to give up their freedom to choose if, when and where to work’.[5]

Uber is doing everything possible to avoid drivers being classified as employees, including negotiating with unions in the United States to allow drivers and food delivery workers to organize in a union to negotiate minimum pay and other benefits.[6] By taking such action, Uber and other gig economy companies such as Doordash and Lyft are seeking to prevent legislation being passed that would recognize workers as employees.

Are there any other alternatives to classifying workers as employees?

In February 2021, Opposition Leader Anthony Albanese claimed that a Labor government would ensure greater rights for gig economy workers. Albanese proposed that the Fair Work Commission could create minimum standards for gig economy workers, including in relation to minimum wage, leave entitlements, and eligibility for unfair dismissal. However, this approach of creating a new category of ‘employee-like’ work, rather than distinguishing gig economy workers as either employees or contractors, has been criticised. Professor Andrew Stewart from the University of Adelaide noted that this could mean gig workers who most closely resemble employees could still be denied employee labour rights due to this new classification.[7]

Do gig workers have rights to unfair dismissal?

Gig workers that are actually employees have rights to unfair dismissal. However, this may be a difficult process to embark upon, as it is uncertain whether a worker is an employee or an independent contractor until it is legally determined, such as by the Fair Work Commission, in accordance with various factors including those in Hollis v Vabu (2001) 207 CLR 21.

Nevertheless, it is still possible to be successful, such as in the case of Diego Franco v Deliveroo [2021] FWC 2818. Commissioner Cambridge determined that the worker was an employee of Deliveroo, and consequently the termination of his supplier agreement was a dismissal from employment.[8] In that case, Deliveroo argued that the worker was an independent contractor because he had freedom over his work hours. However, this assertion was rejected, as in reality, the rider engagement system required the worker undertake work at particular times, to regularly make himself available for work, and prevented him from cancelling bookings. Paragraph 39 of the judgment further explains the position taken by the Fair Work Commission:

“The conclusion that must be drawn from the overall picture which has been obtained, was that Mr Franco was not carrying on a trade or business of his own, or on his own behalf. Instead, he was working in Deliveroo’s business as part of that business. Importantly, the level of control that Deliveroo possessed, and which it could choose to implement or withdraw, whilst not immediately apparent, when properly comprehended, represented an indicium that strongly supported the existence of employment rather than independent contracting. In addition, the fact that Mr Franco could and did work for competitors of Deliveroo, must be assessed in the context of a modern, changing workplace impacted by our new digital world. Mr Franco was, despite aspects of his relationship with Deliveroo including elements usually associated with that of an independent contractor, engaged in work as a delivery rider for Deliveroo as an employee of Deliveroo.”[9]

Similarly, in the former case of Joshua Klooger v Foodora Australia Pty Ltd [2018] FWC 6836, Commissioner Cambridge found that the worker was an employee of Foodora, despite being informed that he was an independent contractor, and thus was entitled to a remedy for unfair dismissal. Commissioner Cambridge explained the finding of employee at paragraph 102 of the judgment, stating:

“In this instance, the correct characterisation of the relationship between the applicant and the respondent is that of employee and employer. The conclusion that must be drawn from the overall picture that has been obtained, was that the applicant was not carrying on a trade or business of his own, or on his own behalf, instead the applicant was working in the respondent’s business as part of that business. The work of the applicant was integrated into the respondent’s business and not an independent operation. The applicant was, despite the attempt to create the existence of an independent contractor arrangement, engaged in work as a delivery rider/driver for Foodora as an employee of Foodora.”[10]

Therefore, gig economy workers may already have a right to unfair dismissal if they can be classified as employees, but not if they are independent contractors. However, having a right to unfair dismissal only permits employees to be back paid their entitlements they ought to have received as an employee, but this is after the fact and does not offer protection while they are performing work for the gig economy company. Furthermore, many gig economy workers may not know of their rights, and may be deterred from even lodging an unfair dismissal case due to the uncertainty of their work status, concerns about losing their working visa, or even just based on the belief that they were an independent contractor as their company had told them. This existing protection is therefore not adequate and should be extended to all gig economy workers, for greater clarity and protection of labor rights.

Where to now?

The answer is far from clear how gig workers can be afforded greater labor rights. Litigation on the matter has been commenced across the globe, and yet different countries have approached the matter in varying ways. Classification of all gig workers as employees may be a preferable approach, but care needs to be taken to ensure that the system of independent contracting is not impaired as a result.

Some gig workers may already actually be employees, despite being labelled an independent contractor. Whether this is the case requires a determination of various factors, and would require the worker to take legal action, such as through an Unfair Dismissal claim in the Fair Work Commission to find out. Considering that a large number of gig workers are foreign nationals on working visas, they may be reluctant to assert their rights out of fear of losing their working rights. Thus, although gig workers may be already entitled to employee benefits, it is too onerous for them to enforce, as they may not know of their rights, be concerned about their working visa, and action would only likely be taken once the employment relationship has ceased.

In any event, immediate reform is necessary to ensure gig workers are not exploited, as they are presently subjected to poor working conditions, unacceptably low wages, and a lack of basic labor rights. The number of deaths of gig transport workers is a further testament to the danger and precarity of this industry.

As Michael Kaine from the TWU highlights, ‘the exploitative gig model that has seen food delivery drivers die now threatens to pervade the entirety of the freight market and has moved quickly into nearly every single area of the economy. This is channelling towards the destruction of industrial rights that have been built up to protect workers over decades. This would be a national emergency.[11]

Gig economy workers will not have rights / access to unfair dismissal laws, redundancy, sick leave amongst other benefits normally afforded to workers. Whilst we all want a cheaper pizza or hamburger, at what human cost should it be?

By Gary Pinchen

References:

[1] Ride or die: The gig economy workers sparking an employment law crisis

[2] Unregulated gig economy exploitation threatens a national emergency 

[3] Family of uber eats rider killed in Sydney files workers compensation clain in test for gig economy

[4] See Hollis v Vabu (2001) 207 CLR 21.

[5] Uber drivers are employees, not contractors, says Dutch court

[6] Gig companies push state level worker laws

[7] Gig economy rights create new class of worker

[8] Diego Franco v Deliveroo [2021] FWC 2818

[9] Diego Franco v Deliveroo [2021] FWC 2818

[10] Joshua Klooger v Foodora Australia Pty Ltd [2018] FWC 6836

[11] TWU WARNS UNREGULATED GIG EXPLOITATION THREATENS A ‘NATIONAL EMERGENCY’