Deliveroo driver ruled to be an employee by the Fair Work Commission

Yesterday, the Fair Work Commission handed down a decision in the matter of Diego Franco v Deliveroo Australia Pty Ltd [2021] FWC 2818, that could have significant ramifications across the Australian gig economy landscape.

Currently, online food delivery giants like Deliveroo and UberEats rely on their drivers being independent contractors, so they can have flexible work arrangements and work for multiple delivery platforms. This therefore means they lack the general protections that employees are entitled to under the Fair Work Act such as unfair dismissal.

Mr Franco launched an unfair dismissal challenge after being dismissed with seven days’ notice for late deliveries. The first determination for the Fair Work Commission was whether he was an employee and therefore prima facie entitled to unfair dismissal protections. Secondly, if he was an employee, they had to determine whether his dismissal was harsh, unjust or unreasonable under section 385 of the Fair Work Act.

Mr Franco submitted that the main factor contributing to him being an employee was that he was not running his own business, rather he was working for Deliveroo and obtaining renumeration from them directly rather than pursuing his own personal profit.

Other factors included the remuneration being non-negotiable, wearing Deliveroo clothing, and that Deliveroo exercised control over Mr Franco through the supplier agreement he signed.

While Deliveroo asserted it had no control over when or where Mr Franco worked which would point to an independent contractor relationship, this was not quite the reality when the working arrangements were examined closer.

Deliveroo utilised a SSB system that required riders to book sessions in advance and preference was given to riders with good performance metrics. This meant that Mr Franco was directed by the SSB system to work particular times, make himself readily available and not to cancel booked engagements. So while superficially it appeared there was an absence of control, Commissioner Cambridge noted that this was camouflaged into a significant capacity for control.

Mr Franco's submission that his termination was harsh, unjust or unreasonable was based on the fact that failing to deliver in a reasonable time was not a valid reason as Mr Franco had never been notified about expected delivery times for drivers.

Deliveroo submitted that Mr Franco was an independent contractor due to him not being required to perform services for the Deliveroo business personally, his ability to accept and refuse work, work whenever he wanted, being able to work for multiple entities at the same time, him signing a supplier contract, supplying his own delivery equipment and being paid on invoices.

However, Commissioner Cambridge said that with “consideration of all the relevant indicia, has, like the colours from the artist’s palette, emerged to form a complete picture… the relationship between Mr Franco and Deliveroo is that of employee and employer”.

Commissioner Cambridge emphasised the fact that Mr Franco was not carrying on a trade or business of his own, but rather working as part of Deliveroo and also took into account how much control Deliveroo exerted over Mr Franco with the SSB system.

When considering how Mr Franco could and did work for other competitors, Commissioner Cambridge contended that this must be assessed in the context of a modern, changing workplace impacted by a digital world and therefore will not always be a determining factor of an independent contractor relationship.

It was then found that there was no valid reason for Mr Franco’s dismissal relating to his capacity or conduct and the substantive reasons were not sound. He was therefore reinstated and will be awarded back pay for lost wages.

Shifting Attitudes

In previous gig work decisions, the Fair Work Commission has typically gone against the workers, finding that their working relationship is more indicative of a contractor relationship. An example from last year was Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a Uber Eats [2020] FWCFB 1698, where the full bench found that Gupta was an independent contractor by focusing on the flexibility of work arrangements and the ability to work for multiple corporations.

However, this is not always the case. A Foodora rider was awarded $15 000 in 2018 for unfair dismissal. In this decision, Commissioner Cambridge focused on the applicant being “integrated into the respondent’s business and not an independent operation”. You can read our article about this case from 2018 here.

This decision also comes after a recent UK Supreme Court decision of Uber BV v Aslam [2021] UKSC 5, where Uber’s appeal was dismissed and Aslam, an Uber driver, was determined to be a worker and entitled to the minimum standards under UK labour law.

The Courts did not determine whether Aslam was an employee however. As the UK labour law framework is quite distinct from the Australian framework the decisions cannot be directly followed, but as Commissioner Cambridge acknowledged in his reasoning, decisions like Aslam confirm the extent to which services on digital platforms are challenging traditional employment concepts.

In a statement to the media, Deliveroo said it planned to appeal the decision.