Written agreement saves Deliveroo - Full Bench finds driver was not an employee
Posted on September 02, 2022
In a significant decision for gig economy workers, the Full Bench of the Fair Work Commission in Deliveroo Australia Pty Ltd v Diego Franco [2022] FWCFB 156 has held that Deliveroo driver Diego Franco was an independent contractor, overturning a previous finding that he was an employee. Accordingly, despite unfair treatment, Mr Franco had no protection against unfair dismissal under the Fair Work Act 2009 (Cth) (FW Act).
This decision applied the reasoning in two High Court decisions handed down earlier this year – Personnel Contracting[1] and Jamsek[2] which provided clarity about the approach in determining whether workers are employees or contractors. In Personnel Contracting and Jamsek, the High Court held that where parties have comprehensively committed the terms of their relationship to a written contract, the characterisation of that relationship must proceed by reference to the rights and obligations of the parties under that contract, unless that contract is a sham or otherwise ineffective. This approach gives primacy to the terms of the contract as opposed to undertaking a broader assessment of the relationship in practice, which had been permitted under the previous multifactorial test prior to these decisions.
Facts
Mr Franco worked for Deliveroo as a delivery driver. Mr Franco signed several supplier agreements with Deliveroo during his engagement, the latest one being the 2019 supplier agreement (Agreement). In April 2020, the Agreement was terminated by Deliveroo for delayed delivery times. Mr Franco then lodged an unfair dismissal claim with the Fair Work Commission. Deliveroo objected to the claim, on the basis that Mr Franco was not an employee but rather a contractor and therefore not entitled to unfair dismissal protections under the FW Act.
Decision at first instance
At first instance Commissioner Cambridge held that Mr Franco was an employee of Deliveroo and not an independent contractor emphasizing that this was in the context of a modern, changing workplace impacted by the new digital world. The Commissioner held that Mr Franco has been unfairly dismissed, and he should be reinstated and paid back pay. Deliveroo appealed this decision.
Decision on appeal
The Full Bench subsequently held that the decision made by Commissioner Cambridge no longer reflected the current state of the law due to the decisions in Personnel Contracting and Jamsek. Applying the principle established in these cases, the Full Bench held that Mr Franco was not an employee, and was an independent contractor. The following factors in the Agreement weighed in favour of a characterisation of an independent contractor relationship:
- The lack of control by Deliveroo over the manner of performance of any work Mr Franco agreed to undertake. It was found that Mr Franco exercised a substantial degree of discretion in relation to the performance of the work including what vehicle he would use and route he would take.
- The requirement that Mr Franco provide the vehicle at his expense to perform the deliveries.
- Mr Franco was not required to provide the services personally, as he could arrange without Deliveroo’s consent for someone else to make his deliveries.
- Mr Franco was required to pay an “administrative fee” for Deliveroo’s software and other administrative services.
The Full Bench noted that had they been permitted to take into account certain realities of the relationship, Mr Franco would have been deemed an employee. However, they were required to apply the approach in Personnel Contracting and Jamsek. In addition, Mr Franco was unable to establish any sufficient evidence to conclude any sham contracting in relation to the Agreement.
The Full Bench acknowledged that “regrettably” the decision left Mr Franco with no remedy from the Fair Work Commission despite which was, in their view, “unfair treatment” on the part of Deliveroo.
There are currently calls on the Federal Government to legislate minimum standards for gig economy workers to ensure they have adequate protections.
Key takeaways
This decision serves as an important reminder of the need to ensure that organisations have comprehensive and carefully drafted contracts with key contractual rights and obligations when engaging independent contractors.
If you need help reviewing your independent contractor arrangements, please contact our workplace relations team.
[1] Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1.
[2] ZG Operations & Anor v Jamsek & Ors [2022] HCA 2
