Introduction
The Full Bench reluctantly found that the driver was an independent contractor, and therefore could not access the unfair dismissal provisions of the Fair Work Act 2009 (Cth). Interestingly, the Full Bench explicitly stated that it came to this conclusion because of the High Court's earlier decisions in Personnel Contracting Pty Ltd and ZG Operations Australian Pty Ltd (see our article Independent Contractor or Employee: The High Court clarifies the test), and that, but for those decisions, it would have upheld Commissioner Cambridge's finding at first instance that the driver was an employee.
We are therefore seeing real changes to how courts and tribunals apply the test of whether a worker is a contractor or employee.
Written Contract
Critical to the Full Bench's reasoning was that the driver had a comprehensive written contract. Applying the High Court's decision in Personnel Contracting, the Full Bench said it was constrained to determine whether the driver was a contractor or employee solely by reference to the rights and obligations established under that written contract. This differs from the previous longstanding approach of the Courts.
The Full Bench could not consider the practical nature of how the relationship played out in practice, only the contractual rights and obligations of the parties set out in the contract.
Key factors
Several key factors led the Full Bench to conclude that the written contract created a principal/contractor relationship, not an employer/employee relationship:
- The driver had the ability to set not only when he worked, but where he worked, and the individual jobs that he accepted. The lack of control of Deliveroo over where the driver worked, and which jobs he fulfilled, indicated a lack of control not typical of employment relationships.
- The driver brought his own vehicle and had an ability to use a vehicle of his choice, provided it was safe and legal.
- The driver had the ability to decide his own route to carry out a food delivery.
- The driver could delegate his work to another person. That he did not do so did not matter, because he had the legal right under the contract to do so.
- The driver was required to pay an administrative fee of 4% of his fees for access to Deliveroo's software and for other administrative services provided by Deliveroo. The Full Bench found that this counted against the existence of an employment relationship.
The Full Bench said that it was required, by the High Court's decision in Personnel Contracting, to disregard the following practical factors that supported the driver's relationship with Deliveroo being an employment relationship, because they were not terms of the written contract:
- The fact that, practically, Deliveroo's platform and algorithm meant that Deliveroo had a significant degree of operational control over its delivery drivers.
- The fact that the driver was strongly encouraged to use a Deliveroo branded insulation bag, shirt and jacket, which he did, and that he therefore presented himself as an emanation of Deliveroo’s business;
- The fact that it was never commercially practicable for the driver to delegate his work to others, and that he never did so.
- The inequality of bargaining power between Deliveroo and the driver, which was reflected in the fact that Deliveroo never negotiated or consulted on the various iterations of its contracts with the driver.
Conclusion
Whilst Deliveroo has closed its Australian operations since the Full Bench handed down its decision, the lesson remains: a carefully drafted contract can provide businesses with a considerable level of certainty that they are legitimately engaging contractors.
How Sharrock Pitman Legal can assist
As Accredited Specialists in Workplace Relations, our legal team advises employers, employees and contractors on all aspects of employment law. Our Employment Law team provides guidance on employment contracts and conditions, redundancy, dismissal and provides assistance with enterprise bargaining.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
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