Deliveroo loses test case as rider ruled an employee

Denham Sadler
National Affairs Editor

The Fair Work Commission has ruled that a Deliveroo rider kicked off the platform last year was an “employee” of the tech giant in a decision with ramifications for the gig economy in Australia.

The Commission’s ruling on Tuesday morning came a week after the federal budget included no mention of the gig economy at all and the Victorian government released its response to a long-running inquiry into the sector, backing all the recommendations and ramping up its campaign for national reform.

Backed by the Transport Workers Union (TWU), food delivery rider Diego Franco won his unfair dismissal case against Deliveroo, with the Fair Work Commission (FWC) ruling that he was an employee of the company with a right to the minimum wage, superannuation and unfair dismissal protection.

It was a significant test case for the gig economy, and directly challenges the business model of Deliveroo and other companies in the sector, which typically classify their workers as “independent contractors”.

Mr Franco was kicked off the Deliveroo app in April last year after having worked for the company for three years, with it arguing that he was too slow making deliveries. In making the decision, the FWC took into account the fact Mr Franco booked his shifts through the Deliveroo app, wore the company’s uniform, didn’t build his own brand and didn’t have a distinct trade or profession.

Former Deliveroo rider Diego Franco

In a statement, a Deliveroo spokesperson said the company would be appealing the FWC decision.

“We do not accept the premise upon which the decision was taken and do not believe this reflects how Deliveroo riders work with the company in practice,” the Deliveroo spokesperson said.

“Riders frequently tell us that the freedom that comes with self-employment is the key reason why they choose Deliveroo, and we will appeal this decision to protect those freedoms.”

TWU national secretary Michael Kaine said the federal government must now reform the sector in-line with the Fair Work Commission’s ruling.

“This is an important judgement and puts Australia in-line with other countries across the world, from the UK, to Spain, and the Netherlands, where the rights of gig economy workers have been recognised,” Mr Kaine said.

“This ruling has huge implications for gig workers in Australia and we urge the federal government to look at it today and start devising regulation now. We want the federal government to regulate in the right way and to put in place a tribunal with full powers to regulate gig workers’ rights and protections.”

It’s unlikely to happen at a federal level any time soon though, with last week’s budget including no new policies or funding for gig economy reform, and no mention of the sector at all.

Mr Kaine labelled this a “glaring omission” and a “signal” to the tech giants “to keep exploiting workers and driving them to their deaths because the federal government won’t be holding them to account”.

Just days after the budget, the Victorian government released its response to an inquiry into the on-demand economy, launched in 2018. In the response, the state government agreed fully or in part to all 20 recommendations, but mostly pushed for the federal government to lead the way in reforming the gig economy.

The Victorian government will allocate $5 million in its own budget this week to support the implementation of the recommendations, which include the setting of principles-based standards to provide fairer conditions for gig economy workers, and scoping work around giving people access to clearer advice on work status and the establishment of an independent body to make determinations.

But the inquiry called for the federal government to take the lead in these reforms rather than states going it alone, and the Victorian government firmly backed this stance in its response.

“The inquiry, and many people who participated in its consultation, called for change to be led at a national level through reforms to national work laws. The Victorian government fully supports this recommendation,” the state government said in its response.

“The Commonwealth is responsible for Australia’s national system of workplace laws. The Victorian government will strongly advocate for the Commonwealth to act on the blueprint for reform of the national workplace system, set out in the report. These reforms require establishing a fit-for-purpose regulatory framework in collaboration with state and territory governments.

“It is regrettable that the Commonwealth did not use this opportunity to adopt the reforms to national work laws identified by the inquiry, which would better support on-demand workers and businesses. The Victorian government will continue to advocate for strengthened and improved legislative provisions.”

While it waits for the Commonwealth, the Victorian government will begin work on setting principles-based standards for work in the gig economy and to ensure platforms operate transparently, to be developed in consultation with the sector and workers.

It will also consider the legislative and administrative options on offer to achieve the outcomes put forward by the inquiry.

The state government will consider stumping up a fit-for-purpose body to provide a mechanism for accessible and fast resolutions of work status in the gig economy.

“The Victorian government will consult with key stakeholders and existing state regulatory agencies to determine whether Victoria should establish a determination function and fast-tracked resolution mechanism,” it said.

It will also “further consider” the feasibility of facilitating or requiring work status determinations.

Earlier this year Deliveroo rival Menulog announced plans to trial an “employment model” in Sydney where it will pay its workers the minimum wage and superannuation.

Do you know more? Contact James Riley via Email.

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