Gig economy companies have been cleared to keep classifying their riders as independent contractors rather than full employees entitled to minimum wages and protections after a ruling by the nation’s industrial tribunal.
The ruling turns the focus to the federal government’s promise to legislate new rights for gig economy workers, a move that the powerful Labor-aligned Transport Workers Union declared was now “urgent”.
Diego Franco initially won his unfair dismissal case but a series of High Court rulings resulted in it being reversed.Credit:Janie Barrett
The Fair Work Commission on Wednesday overturned a previous ruling that a Deliveroo rider, Diego Franco, was an employee and protected from unfair dismissal. Had the ruling stood, it would have likely forced Deliveroo to make huge back payments to its riders and upended the gig economy sector, which also includes firms such as Uber, DoorDash and Menulog.
While the commission found that “as a matter of reality” Franco’s work had the hallmarks of employment, three senior commissioners said they were bound to follow a recent High Court ruling that forced them to “close our eyes to these matters” and focus overwhelmingly on the terms of the contract between Franco and Deliveroo.
Those terms, which allowed Franco to have other riders substitute for him, let him choose his own route to the customer and required him to provide his own vehicle, made him a contractor. Firms such as Deliveroo and Uber, which declined to comment, use contractors who do not get traditional workers' compensation or unfair dismissal rights but enjoy more flexibility. They also provide insurance for their riders.
Deliveroo and the transport union, which has been representing Franco, said the decision showed why the federal government needed to reform the sector, as it has committed to do.
"Deliveroo believes the time has come for the discussion to move beyond the status of riders," a Deliveroo spokeswoman said. "There is now clear certainty that our riders are genuinely engaged as independent contractors."
She said Deliveroo riders could choose when, where and how long they wanted to work which was only possible through self-employment.
“We are committed to working with the federal Minister for Industrial Relations and all stakeholders to develop a national reform program that is fit for purpose for the way riders choose to work,” the spokeswoman added.