The ride-share company deactivated the worker’s account in accordance with their “Deactivation Policy” for “failing to meet the service standards by failing to maintain an adequate overall rating”. Specifically, the worker breached the policy because he did not accept “33% of the trip requests sent to him” and “cancelled 15% of the trip requests”. The worker viewed the termination of the Services Agreement as a dismissal and made an unfair dismissal application.

The ride-share company is an internet based service for users (or Riders) to have real time access to transportation. Before becoming a Driver, workers must set-up an account by submitting a valid driver’s license, criminal history check, driving history report, as well as demonstrate sufficient insurance is in place and the vehicle meets the relevant standards. Once approved, provided the worker accepts the terms and conditions, they have an active account and are able to accept trip requests made by Riders.

In order to be protected from unfair dismissal, the worker must be an employee in accordance with the Fair Work Act (Cwth) (“the Act”).  The ride-share company disputed the claim and successfully argued the worker was an independent contractor.

The Commission considered well established case law to determine whether or not the worker was an employee.  The Commission considered the multi-factorial approach to assess the true nature of the relationship. The Commission examined the extent to which the company controlled the actions of the worker. The Commission noted the worker was “able to choose when to log in and log off … he had control over the hours he wanted to work, he was able to accept or refuse trip requests (with some caveats) and he was free to choose how he operated and maintained his vehicle”. The worker used and maintained his own car, smart phone, data plan and insurance. The Commission also considered the terms and conditions agreed to by the worker, the payment arrangement and compliance with the Australian Taxation Office in respect of the registration and payment of Goods and Service Tax.

The Commission did note the company retained control of fees and pricing.  However concluded the control was not considered to be “overwhelmingly strong factors” to support an employment relationship.

The Commission also applied the “wages-work bargain” test noting “For there to exist an employment relationship, certain fundamental elements must be present.  A contract of employment is, at its essence, a work-wages bargain….to create such a contract is an obligation on the one side to perform the work or service that may reasonably be demanded under the contract, and on the other side to pay for such work or service.”  The Commission accepted the worker received a fare for a trip, minus a services fee paid to the ride-share company and considered the payment did not amount to a receipt wages.

In relation to wages-work bargain tests, the Commission remarked the test may be outdated and suggested a need to evolve moving away from traditional test of employment in recognition of the strengthening of the digital economy.

The worker submitted the Commission ought to consider case law from the United Kingdom in which the Employment Tribunal concluded an Uber driver was a worker for the purposes of the Employment Rights Act 1996 (UK).  The Commission considered the decision was of no assistance give the expanded definition of “employee” which was not applicable in Australia.

Overall, the Commission found in favour of the ride-share company and classified the Driver as an independent contractor working under a contract for services. The unfair dismissal application was dismissed.

This case is a timely reminder to ensure contracts correctly record and characterise the agreement and status of workers. The Commission confirmed “The terms and terminology of the contract are always important.  However, the parties cannot alter the true nature of their relationship by putting a different label on it.  In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not.”

Under current employment legislation, costly consequences await organisations found to be recruiting, managing or terminating staff incorrectly. Attend our Managing Termination, Redundancy and Unfair Dismissals to increase your knowledge of counselling and discipline processes, and how to best manage an unfair dismissal claim.

Written by Stephanie Beckett

[2017] FWC 6610