3 questions raised by the FWO Uber decision - HRM

By Alan J. McDonald

In the wake of a Fair Work Ombudsman decision that Uber drivers are contractors, the gig economy is being scrutinised.

Following a two-year investigation into whether Uber Australia is engaged in “sham contracting’ arrangements with its drivers, the Fair Work Ombudsman (FWO) made the contentious decision that Uber drivers are not classified as employees. The decision will likely have a huge flow on effect for all those working in the gig economy in Australia despite FWO saying that the investigation only relates to Uber.

Here are three questions worth asking in the wake of the FWO’s decision.

1. Do we need to establish a new class of employee?

As a result of the Fair Work Ombudsman ruling there may be a need for a new employee classification that relates to gig economy workers. Following the ruling gig economy workers can’t be classified as employees under the existing classifications, however they don’t necessarily meet the definition of independent contractors because they are not running businesses.

A large percentage of Uber Australia drivers work full time and only for Uber Australia which would normally result in a conclusion that they are classified as employees, however, as that is not the conclusion of FWO there may been to be a new classification to provide some protection.

2. Do we need a new regulatory body to deal with the gig economy?

It is widely alleged that apps such as Uber are exploitative with drivers having no control over how much they are paid per trip. With very little regulation in place to monitor the working conditions of the drivers it may be suggested that a new regulatory body be established that can deal with complaints or issues that arise between Uber Australia and its drivers.

The Ride Share Drivers’ Association of Australia says that it “exists to promote and protect the rights and interests of Ride-Share Drivers across Australia” however the association exists to provide ride-share drivers with information rather than representation or regulation. There may be a need for a new regulatory body to be created to deal with the new class of employee created by the gig economy. The onus to deal with disputes would then fall onto the new body once the new class of employment has been established.

3. Should Uber’s agreement with drivers constitute a sham contracting arrangement?

Fair Work Ombudsman Sandra Parker said recently that “Uber Australia drivers have control over whether, when, and for how long they perform work, on any given day or on any given week”, and accordingly are not classified as employees. However, the argument of whether a sham contracting arrangement exists because Uber drivers cannot set their own pay rate, meaning they are not technically independent contractors, who traditionally set their own prices and invoice companies for work done.

More worryingly, Uber can effectively ‘terminate’ drivers without warning, simply by deactivating drivers from the app, with the drivers having little to recourse following Fair Work Australia’s decision.

Moving forward it will be interesting to see what steps are taken in Australia to regulate an industry that is growing at an exponential rate, and whether legislation can keep up.

Reference: ‘3 questions raised by the FWO Uber decision’, HRM, Thursday 27th June 2019.