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February 07 2018
In Kaseris v Rasier Pacific VOF(1) the Fair Work Commission (FWC) rejected an Uber driver's claim that he was an employee, upholding Uber's argument that he was instead an independent contractor.
The decision was made in the context of an application by Uber driver Michail Kaseris under Section 394 of the Fair Work Act 2009 (Cth) for an unfair dismissal remedy. Kaseris made the application after his access to the Uber app, which drivers use to accept rides, was deactivated on the basis of a low driver rating.
Kaseris argued that the FWC should follow a recent UK decision in which the Employment Tribunal upheld a ruling that rejected the argument that Uber drivers were self-employed and entitled to no basic workplace rights.
In response, Uber contended that the lack of any employment relationship was supported by a number of terms in its services agreement, which sets out the terms and conditions governing the relationship between drivers and Uber, and includes the following provisions:
Uber argued that these provisions in the services agreement indicated the absence of any wages-work bargain, which it stated was an essential factor in any employment relationship.
While Uber argued that Kaseris' application should fail "on this point alone", it also argued that the multi-factorial approach developed by courts and tribunals to determine whether an individual is an employee weighed against there being an employment relationship between Uber and Kaseris. This was because Kaseris:
In addition, Uber made no superannuation contributions on behalf of Kaseris, nor did he accrue any leave entitlement.
Elements of an employment relationship were absent
The FWC stated that it was "clear on the facts" that the fundamental elements of an employment relationship were absent from the relationship between the parties.
In arriving at this determination, it noted that Kaseris was not required – under either the services agreement or any other agreement between the parties – to perform work or provide services for the benefit of Uber. Instead, Kaseris was free to perform "as much or as little work as he liked", working "where and for whom he saw fit, without any further reference to [Uber]". In addition, Uber made no payments to Kaseris for the provision of any work or services. Instead, Kaseris received a proportion of the fee charged for a trip. This meant that the work-wages bargain – the "minimum mutual obligation necessary for an employment relationship to exist" – was "plainly absent".
The FWC also agreed with Uber that the multi-factorial approach developed by courts and tribunals to determine whether an individual is an employee weighed against there being an employment relationship. In doing so, it made the following observations about how the multi-factorial test should be applied:
"a consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture of the relationship from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details."
The FWC also observed that the ultimate question, applying a full bench of the FWC decision,(2) was:
"whether the worker is the servant of another in that other's business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part?"
The FWC rejected Kaseris' submission that it should follow the decision of the UK Employment Tribunal, as that decision applied a statutory definition of a 'worker' which went beyond the meaning of an 'employee' at common law. For this reason, the decision was of no assistance to the FWC.
The FWC concluded that no employment relationship existed between the parties; therefore, Kaseris was unable to bring a claim for unfair dismissal.
Suitability of traditional tests to changing work relationships
However, the FWC noted that the work-wages bargain and multi-factorial approach used by courts and tribunals had developed before the new gig or sharing economy; therefore, such notions may be "outmoded" and "no longer reflective of our current economic circumstances".
While the FWC raised the possibility of the legislature developing laws "to refine traditional notions of employment or broaden protection to participants in the digital economy", it emphasised that "until then, the traditional available tests of employment will continue to apply".
Employers should be aware of the increasing tension between the rise of the gig economy and the traditional tests used by courts and tribunals to determine the existence of an employment relationship.
While any new legislative or common law developments may affect an organisation's obligations, the traditional tests used by courts and tribunals will continue to apply. This means that courts will look at multiple factors to determine the existence of an employment relationship.
Further, the engagement of drivers by Uber is under extremely specific terms and is structured in a way that would make it difficult for any tribunal applying common law principles to find the existence of an employment relationship. The outcome may not be the same for other players in the gig economy.
For further information on this topic please contact Mark Sullivan at Lander & Rogers' Sydney office by telephone (+61 2 8020 7700) or email (email@example.com). Alternatively, contact Kaitlyn Gulle at Lander & Rogers' Melbourne office by telephone (+61 3 9269 9000) or email (firstname.lastname@example.org). The Lander & Rogers website can be accessed at www.landers.com.au.
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