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The gig economy is an integral part of everyday life for many Australians, both as customers and service providers. Whether you are a customer using a ride-sharing service as a mode of transport, or an individual using these app-based platforms to earn income, you are participating in the gig economy. The gig economy is notably a grey area of employment law. However, employers in the gig economy are still bound by the same legal framework as employers in other sectors. This article will provide employers running a gig economy business with an overview of their employee obligations to ensure they operate in accordance with their own legal duties.

What Is the Gig Economy?

The gig economy uses online platforms to connect customers with individuals who provide a variety of services. Such online planforms include websites and mobile apps. It provides flexible options for both consumers and businesses and allows individuals to offer their services at a time and location that suits their needs. This flexibility can blur the lines on whether a service provider is an employee or an independent contractor. Importantly, businesses operating in the gig economy must be aware of this distinction and their relevant obligations.

Employee vs Independent Contractor

Businesses must remember that employees have different rights and obligations to independent contractors. When determining whether someone is an employee or independent contractor, the courts will look at the whole relationship between the parties. Indeed, what is written in the parties’ agreement does not necessarily make someone either an employee or an independent contractor. Therefore, gig economy businesses must keep this in mind when engaging workers.

The Fair Work Ombudsman provides the following indicators that can be used to determine if someone is an employee or independent contractor:

  • intention of the parties;
  • ability to delegate or further subcontract work;
  • amount of control over how work is performed;
  • financial responsibility and risk involved in the work;
  • tools and equipment used to perform the work;
  • hours of work performed;
  • expectation of work continuing;
  • how tax is paid;
  • how superannuation is paid; and
  • any leave entitlements.

This is by no means an exhaustive list. However, it provides a solid framework for determining whether a worker is either an employee or an independent contractor and allows employers to conduct their businesses accordingly. 

The Gig Economy and the Law

There have been two recent Fair Work Commission (Commission) decisions that highlight the blurred lines between a gig economy worker as either an employee or an independent contractor.

Diego Franco v Deliveroo Australia Pty Ltd [2021] FWC 2818

This case involved an unfair dismissal application by a former Deliveroo rider, Diego Franco. Deliveroo terminated their supplier agreement with Mr Granco after determining that he missed the expected delivery time on several occasions.

Deliveroo argued that Mr Franco was an independent contractor and therefore unable to access unfair dismissal protections. However, the Commission found that, on balance, Mr Franco’s employment relationship with Deliveroo was as an employee. This is despite indicators that would ordinarily attribute Mr Franco as an independent contractor. The unfair dismissal claim was successful.  

Importantly, Deliveroo has noted it intends to appeal this decision. Hence, the distinction between an employee and a contractor is still blurry.

Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd T/A Uber Eats [2019] FWC 5008 and [2020] FWCFB 1698

This case had similar factual circumstances involving an Uber Eats courier, Amita Gupta. Ms Gupta lodged an unfair dismissal claim with the Commission after Uber Eats terminated her access to the delivery network. 

Initially, the Commission dismissed the unfair dismissal application on the basis that Ms Gupta was not an employee of Uber Eats. While she appealed the decision, the Commission again found that Ms Gupta was an independent contractor and not an employee of Uber Eats. Accordingly, unfair dismissal protections did not apply. 

Expectations and Obligations for Employers Who Have Gig Workers

As these two decisions show, the Commission will determine the employment status of workers in the gig economy on a case by case basis. For employers with gig workers, this means there is no definitive answer when it comes to determining the status of your workers.

This distinction is crucial because employers have certain obligations to their employees that may not apply to independent contractors. For example, employees can receive:

  • protections such as unfair dismissal, pay, leave and notice entitlements; and 
  • protection from sham contracting. 

Key Takeaways

As an employer, it is important to understand the difference between an employee and an independent contractor. When running a gig economy business, you want to ensure you meet your various legal obligations. As this is a complex and grey area of the law, it can be beneficial to seek advice from an employment lawyer. For more information about your expectations and obligations as an employer in the gig economy, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

What is the gig economy?

The gig economy uses online platforms to connect customers with individuals who provide a variety of services. Such online platforms include websites and mobile apps.

How can I determine whether someone is an employee or contractor?

The Fair Work Ombudsman provides some indicators that employers can use to determine if someone is an employee or independent contractor. For example, consider the hours of work you expect this person to perform. Likewise, think of the amount of control this person has over how they can perform their work. Consider also, any leave entitlements that may apply.


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