The question of whether a worker is a contractor or not can be a blurred line. However, a case involving Uber has delivered further legal clarification.
Uber Decision – are they contractors?
In the recent decision of Suliman v Rasier Pacific Pty Ltd  FWC 4807 on 12 July 2019 (Rasier Pacific Pty Ltd is more commonly known by its trading name Uber) by Commissioner Bisset (Commissioner) of the Fair Work Commission (FWC), further clarification was provided on the considerations as to whether a worker is an employee or an independent contractor.
As a brief summary of Uber’s operations, drivers for Uber use a ‘Partner App’ in order to accept (or reject) trip requests from prospective users of Uber’s services. Drivers are able to log on or log off the Partner App as they wish and are not required to accept a minimum number of trip requests. Uber does not restrict drivers from performing services for its competitors (such as Didi and Ola) and it is quite common to see vehicles displaying multiple logos of various rideshare companies.
Mr Suliman argued that his relationship with Uber was “more like that of a casual employee” due to the fact that Uber exercised control over him using the Partner App but did not require him to be available for work at all times. Mr Suliman went on to say that he would not negotiate fares, did not know how long a trip would take or control the payment of trips (all of which Mr Suliman alleged was controlled by Uber). Mr Suliman finally submitted that, as a driver who was not required to be available at all times, he is “not distinguishable” from a casual employee and therefore was an employee protected from unfair dismissal.
The Commissioner disagreed with most of Mr Suliman’s arguments and noted his argument that he is paid only when he works but not required to work was a “overly simplistic” characterisation of the relationship between an employer and a casual employee. The key difference is that a casual employee could be compelled to perform duties once they accepted work from an employer whereas Mr Suliman was free to reject trip requests from the Partner App despite being logged in (and there would be no consequences for doing so).
The Commissioner drew an analogy that a casual employee of Coles attending work would not be able to leave the workplace prior to completing their shift without seeking or obtaining permission from their supervisor. In Mr Suliman’s circumstances however, he was free to log into the Partner App without permission from Uber for any interruptions in his ability to accept trip requests. For this reason, the Commissioner considered that Mr Suliman’s relationship was not indicative of employment.
Key Points from the FWC
Accordingly, the key indicia for determining whether a worker is an employee or a contractor involves considering the degree of control the worker retains over the work performed. Whilst the Commissioner acknowledged that Mr Suliman was not given information on the length of trips or the ability to negotiate fares (in order to determine whether to accept trips) which suggested control, the Commissioner was of the opinion that these factors did not amount to a high level of control by Uber given that Ms Suliman had discretion as to whether to accept or reject trips.
A number of other indicia were also considered by the Commissioner, including whether or not Uber had required Mr Suliman to work exclusively for Uber. Whilst it was noted that Mr Suliman was only driving for Uber, it was determined that his written agreement with Uber placed no restrictions on his ability to work for anyone else and that it was largely his choice. Accordingly, the lack of exclusivity was found to weigh in favour of a finding that Mr Suliman was an employee.
Given the potential risks of misclassifying a worker as a contractor as opposed to an employee (such as underpayment of wages, non-payment of entitlements such as annual leave or breaches of sham contracting laws), it is important to consider whether your workers have been engaged correctly. Breaches of the sham contracting provisions of the Fair Work Act 2009 (Cth) may expose businesses to penalties of up to $12,600.00 per breach for key individuals (such as Directors or Managers) or $63,000.00 per breach for a company involved.
What should you do?
If you engage contractors, we recommend asking yourself the following questions:
- How much control do I exercise over my contractors? – you may wish to consider whether you have made it clear to your contractors they are free to reject work.
- Do I allow my contractors to work for other businesses? – you may wish to ask your contractors if they are performing work for other businesses and make it clear that they are permitted to. If they do perform work for other businesses, you may wish to make a note of which business they work for.
- Do I require my contractors to provide their own tools and equipment? – contractors generally provide their own tools and equipment in addition to any applicable insurance.
- Do I allow my contractors to sub-contract? – contractors are generally allowed to delegate their services to another contractor.
- How am I paying my contractors? – contractors are generally paid on a task basis as opposed to being paid for their time (e.g. a cleaning contractor might be paid for each square metre they service as opposed to being paid by the hour).
If you believe that your business may have misclassified a worker, NB Lawyers – Lawyers for Employers can offer an obligation free consultation to discuss how we can assist you with any concerns you may have.
About the Authors
Jonathan leads a team of handpicked experts in the areas of employment law and commercial law who focus on educating clients to avoid headaches, deal with problems before they fester and when action needs to be taken or a mistake is made mitigate risk and liability.
Dan Chen is a lawyer at NB Lawyers, the lawyers for employers, and specialises in employment law. Dan is passionate about assisting business owners, small and large understand their obligations under Australia’s complex workplace relations system.