Fair Work Commission case further highlights uncertainty of legal status of gig economy workers

Since our previous update regarding the employee versus contractor distinction (available here), the Fair Work Commission (Commission) has now determined in Diego Franco v Deliveroo Australia Pty Ltd [2021] FWC 2818 that a Deliveroo rider was an employee protected from unfair dismissal, and not an independent contractor. The case further highlights the uncertainty about the legal status of gig economy workers and whether they are entitled to minimum employee entitlements and protections.

Deliveroo rider, Diego Franco (Mr Franco), was dismissed via email in April 2020 with seven days’ notice on the basis he had failed to maintain reasonable delivery times and was subsequently in breach of his supplier agreement with the company.

Following his dismissal, Mr Franco lodged an unfair dismissal application with the Commission, seeking reinstatement, remedy and backpay.

The Commission determined Mr Franco was a Deliveroo “employee” who had been unfairly dismissed, rejecting Deliveroo’s jurisdictional argument that Mr Franco was an “independent contractor” who was not entitled to unfair dismissal protection.

The Commission found that there was an employment relationship. Key matters relied upon by the Commission were that Mr Franco could not be seen as conducting his own business or trade capable of developing any goodwill, and that Deliveroo had the practical capacity (despite the terms of the written contract) to exert a high level of control over Mr Franco.

The Commission noted that Mr Franco’s written contract characterised him as a contractor and that certain features of the relationship were indicative of an independent contractor relationship. However, this was not sufficient to displace the Commission’s view that, from a practical point of view, he was for all intents and purposes treated in the same way as an employee.

In respect of the dismissal, the Commission held that Mr Franco’s termination by way of email without any formal, prior warning, was unjust, unreasonable, and unnecessarily harsh. Orders were made for Mr Franco’s reinstatement and payment of lost pay.

The decision highlights the uncertainty in determining whether a worker is an employee or contractor which will depend on the specific circumstances in each case. Further clarity in this area may be provided in pending High Court appeals which we are monitoring closely.

Deliveroo has indicated it will seek to appeal the decision. DMAW Lawyers will continue to provide updates on the progress of any such appeal.

This article provides general comments only. It does not purport to be legal advice. Before acting on the basis of any material contained in this article, we recommend that you seek professional advice.