Flat White

Sorry Labor, but the gig economy is alive and well

27 May 2021

4:00 AM

27 May 2021

4:00 AM

There’s a lot of excitement coming from the union movement and the usual suspects among the commentariat over the recent ‘Deliveroo’ decision. ‘This is the end of gig’, they triumphantly proclaim. ‘Yeh!’  

Sorry, folks, but I’ve a bucket of cold water to splash about. 

The unions are excited because the Fair Work Commission (FWC) has declared that Deliveroo food deliverers are employees and not independent contractors. The Transport Workers Union would be hopefull that the decision will push Deliveroo to enter enterprise agreements with it for example. But at this stage, Deliveroo is appealing the decision. 

However there’s nothing at all unusual about the FWC decision. In 2018, a similar company to Deliveroo, the Germanbased Foodora, left Australia after its delivery people were declared to be employees. Conversely, in April  2020, Uber Eats delivery people were found to be independent contractors, not employees.  

To the casual observer the question might be asked, ‘is there some inconsistency here?’ Well, no. In fact the FWC (and the courts) are being entirely consistent. What the law requires is the application of the standard common law tests to distinguish an employee from a self-employed person. In fact, what the law does is identify whether a contract in use is an employment contract or a commercial contract.  

The process involves considering up to about 20 or more factors such as: Did the worker have to work certain times? Was the worker ‘required’ to work? How was the worker paid? The task at law is to look at all the factors and give an overall assessment. Often the answer is clear. Sometimes its lineball. The answer depends on the circumstances of each individual case. 

Even though Foodora, Deliveroo and Uber Eats appear to do the same thingorganise riders to collect food from restaurants and deliver the food to customers at homein fact, they each have different contracts and manage the process differently. That’s why the rulings differ  

I’ve examined both the Deliveroo and the Uber contracts. I’m not surprised by the Deliveroo decision. There are major operational differences between the companies. The Deliveroo appeal will be interesting. 

Instead of the Deliveroo decision being the end of gig in Australia, in fact, it supports the legitimacy of the gig economy. Australia is close to being unique in the world on this issue. 

In 2006, Federal legislation secured across the country the ‘common law’ test for employee vs contractor determinationsThe Independent Contractors Act followed on from a 2006 International Labour Organisation declaration which secured the right of people to be self-employed. Australia is a signatory to that international obligation 

Further, Australia has done more than any country to protect and defend self-employed people.  

The Independent Contractors Act has unfair contract provisions built into it. In addition, we have specific Federal unfair contract laws for small business people that are currently being ‘beefed up. Then there are the current moves to create payontime laws for small business people. The JobKeeper and JobSeeker benefits were made immediately available to self-employed people during 2020. In other words, the protections for self-employed independent contractors are worldleading.  

At the same time, there is no tolerance for sham contracting, with specific laws against that practice as well. That’s where the FWC and the courts play a vital role in applying the common law tests. This is to ensure that independent contracting is genuine. 

But this regime that protects the right to be self-employed is hated by Australian unions and Labo in general.  They run scam media plays trying to boost the argument that self-employment is on the way out globally. 

They’ve pointed to a UK court decision which says that Uber drivers are employees. But that decision was made under an odd 1990s UK law that says independent contractors can be ‘a little bit an employee. Its nonsense. I’ve discussed this before in the Spectator AustraliaIt has no relevance to Australia. 

Australian unions also point to California which, in January 2020, passed a law that made it illegal to use self-employed people. The law pushed Californian unemployment to a rate 50 per cent higher than the rest of the USA. The Californian legislature hurriedly created exemptions for lawyers, doctors and any other sector with enough political grunt to be excluded. In  November 2020, Californians voted overwhelmingly to remove ridesharing services from the reach of these anti-gig laws through a special referendum. 

But this ‘we hate independent workers’ movement is deeply embedded in Australian Labor. The Victorian government is moving ahead with its Californianinspired plans to make self-employment illegal.  The Victorian agenda is to kill off self-employment. Incredibly that is its policy. And unions love it! 

But Victorian Labor’s plan is confronted by the Independent Contractors Act which makes its agenda difficult to pull off constitutionally. This is because the Independent Contractors Act overrides state laws on the issue. This then explains the hype around the (very normal) Deliveroo decision. 

Labor is eager to turn ‘gig’ into an election issue. It’s looking to do this by demonising the gig economy, independent contractors, self-employment and so on. Its attempts, of course, breach international ILO obligations and it’s up against the most advanced package of self-employment protections in the world—but what’s that to its political ambitions. 

Labor’s agenda threatens those protections.   

Ken Phillips is Executive Director of Self Employed Australia  

Got something to add? Join the discussion and comment below.

Show comments