Independent contractor vs employee 3 min read
In the latest of a series of cases examining the employee-independent contractor distinction, the Fair Work Commission (FWC) has found a Deliveroo delivery rider to be an employee and protected by unfair dismissal laws.
Employers, particularly those in the gig economy, should carefully consider whether workers engaged as independent contractors are properly considered employees.
Mr Franco commenced working for Deliveroo as a rider on 22 April 2017. He also worked as a rider for Uber Eats and Door Dash. Mr Franco's 'supplier agreement' with Deliveroo described him as an independent contractor. Mr Franco was free to choose if and when he delivered for Deliveroo and that he could work for any third party entity. Mr Franco was required to provide his own equipment to perform the services for Deliveroo.
Mr Franco's contract with Deliveroo was terminated in April 2021 due to delays in his delivery times.
The FWC rejected Deliveroo's claims that Mr Franco was an independent contractor. The 'overall picture' was that Mr Franco was not running his own business but was working as part of the Deliveroo business. Some of the key factors in finding that Mr Franco was an employee:
- Level of control: while Mr Franco had no obligation to actually perform work for Deliveroo, Deliveroo had the capacity to exercise significant control over when, where and for how long he worked through its performance data analytics and metrics.
- Work for competitors: the fact that Mr Franco was permitted to work for Deliveroo's competitors and that he did so, often at the same time through 'mulit-apping', was not sufficient to prevent the relationship being that of employment. Traditional notions of exclusivity 'must be assessed in the context of a modern, changing workplace impacted by our new digital world'.
- Equipment: Mr Franco did not have a substantial investment in the capital equipment he provided to perform the work because he also needed the motorcycle and smartphone for personal use.
- Goodwill: the FWC disagreed with Deliveroo's claim that Mr Franco was conducting his own business and developing goodwill as a 'rider for hire'. Mr Franco did not seek to distinguish himself from a Deliveroo rider and had no prospect for him to have developed any goodwill.
Describing Deliveroo's treatment of Mr Franco as 'unconscionable' the FWC found the dismissal was unfair and ordered reinstatement. Mr Franco was never informed of a delivery timeframe he was required to satisfy and his employment was terminated via email without warning.
Deliveroo is appealing the decision. Keep an eye out for our updates on that and other developments in the employee/independent contractor distinction.