The next big "gig": Are workers in the sharing economy employees?

What you need to know

• The status of workers engaged to perform work as an "employee" or "contractor" is a perennial issue. The United Kingdom Employment Tribunal has recently considered this issue in the context of Uber's London-based drivers. The Tribunal held the drivers were "workers" and so entitled to minimum wages and entitlements (see Mr Y Aslam, Mr J Farrar and Others v Uber, Employment Tribunal judgment ET-2202550, 28 October 2016).
• Uber has indicated that it will appeal this decision. The decision has significant implications for Uber and the sharing economy. The issue is likely to be pursued by unions or workers in Australia.
• Australian governments may take a regulatory response to the issue, for example, by introducing a separate regime or "deeming" provisions to provide these workers with certain entitlements, similar to the "worker" status in the United Kingdom or even a scheme similar to the owner-driver laws in some Australian states.

What you need to do 

• Carefully review your relationships with workers to ensure that those currently engaged as independent contractors meet the common law test for an independent contractor. Also ensure that those engaged as employees are receiving the proper entitlements due to an employee under the Fair Work Act 2009 (Cth) and any applicable industrial instruments.
• If you operate a business model where you utilise independent contractors, watch for developments in this space.

Implications

The rise of the "sharing economy" and "gig" workers

In recent years there has been a global explosion of mobile technology platforms that connect people with other individuals who provide services such as transport, food delivery and even odd jobs. Businesses use digitally enabled market places or platforms to pair providers with consumers on a "gig" by "gig" basis. These businesses have been collectively named the "sharing" economy.  Businesses in this sector include Uber, Airtasker, Foodora and Deliveroo, to name just a few. 

How are workers engaged in the sharing economy?

Sharing economy businesses primarily operate on a model of pairing service providers and customers, with the service providers being engaged as independent contractors. The classification of these workers as "independent contractors" is being tested in litigation across the world. The challenges all focus on whether the workers are really self-employed, or are in fact employees.

Recently, some Australian unions have taken steps to represent and organise the sharing economy workforce, or parts of it. Unions will likely be active in challenging the status of workers through litigation and lobbying government to regulate the sharing economy.

What was the UK decision on Uber about?

The United Kingdom Employment Tribunal decision is an example of a challenge to the status of workers being taken by unions. The proceedings were commenced by the GMB Union on behalf of a number of Uber drivers.

The Tribunal determined that the drivers were "workers" under UK employment legislation and entitled to minimum wages and entitlements. The category of "worker" is a feature of the UK's system of employment regulation which does not exist in Australia. It is a middle ground between the categories of employee and independent contractor. 

Uber has indicated that it will appeal the UK Employment Tribunal Decision. If the decision is upheld on appeal, it will have a significant impact on the sharing economy in the United Kingdom.

What are the implications of the decision for Australian businesses?

In Australia, there is a delineation between independent contractors and employees.  Whether a sharing economy worker is an independent contractor or an employee is likely to be determined by applying the "multi-factor" test.

The UK Employment Tribunal considered the contracts and invoices which Uber said create a contractual relationship between passengers and Uber, rather than Uber and drivers, and rejected Uber's characterisation of the relationships, describing them as "fiction".

The Tribunal took into account many factors which Australians would recognise as considerations in the "multi-factor" test for determining whether a person is an independent contractor or employee, including: 

• drivers have the freedom to choose when and if they work 
• Uber's marketing is for the benefit of the company and not individual drivers
• drivers have no opportunity to negotiate the fare with passengers
• Uber recruits and interviews drivers
• Uber controls key information, such as all passengers' details
• Uber sets the route to take and controls the performance of all drivers' duties 
• there are performance management and disciplinary procedures in place
• Uber accepts the risk of loss; and
• Uber handles complaints by passengers.

Factors not directly taken into account by the UK Employment Tribunal that may be relevant in the Australian context include:

• drivers generally provide their own capital and equipment, including the vehicle (which is generally a factor weighing in favour of an independent contractor relationship); and
• drivers generally do not have the ability to subcontract or delegate the performance of work to another person (which is generally a factor weighing in favour of an employment relationship).

Has the status of sharing economy workers been challenged in Australia?

There has not yet been litigation about sharing economy workers in Australia. It is likely that the status of such workers will be challenged by workers or unions at some stage.

Unions in Australia have taken steps to directly address the terms of engagement of workers in the sharing economy. For example, Australian unions have been running a campaign seeking entitlements for workers of Airtasker as employees rather than as independent contractors, including by releasing a discussion paper entitled "Innovation or Exploitation? Busting the Airtasker Myth". 

Where to from here?

Employee lawyers and unions have publicly indicated that they are preparing to bring an Australian test case on the legal framework of the contractor relationship in the sharing economy.  It remains to be seen how Australian courts will characterise the relationship of the company and those providing the services to end users. Any test case will involve a novel application of traditional considerations.

If a balance between innovation, flexibility, and workers' rights is not able to be found in litigation, it is possible that Australian governments could take steps to regulate this burgeoning sector. The legislature could – as in the UK – extend employment rights to a broader group of individuals. It could also adopt a system of regulation like NSW's system of regulating owner drivers, which involves a tribunal setting basic minimum standards, such as payments. Areas that could be regulated include workers' compensation, superannuation and rates of pay. The work health and safety and bullying regimes are already considered to cover such workers.

Whatever happens, this will be a topic to watch, as the new economy collides with the old world of employment and industrial relations.