Feds must lead on gig economy reform

Denham Sadler
National Affairs Editor

The Commonwealth should take the lead on significant reforms to the gig economy to fix current deficiencies that disadvantage workers in the sector, a landmark two-year inquiry has found.

The Victorian government launched the inquiry into the on-demand workforce in September 2018, with former Fair Work Ombudsman Natalie James appointed as chair. The inquiry was originally set to report late last year, but this was pushed back until the end of June.

Ms James has now tabled her report into the gig economy, a sector that has been found to be rife with uncertainty and instability for workers, who commonly lack bargaining power and the ability to access remedies.

UberEats: Was the centre of a Fair Work Commission case over employee status as contractors

The inquiry hinged on the question of whether those working for gig economy companies such as Uber are independent contractors or employees. Most tech companies claim those working for them are independent contractors, meaning they don’t have to provide any of the benefits or protections provided by stable employment.

Ms James found this work status test to be the “root cause” of the current system’s failings, with attempts from workers to clarify the issues leading to “conflicting and caveated advice”.

The report outlined a series of “revisionist not revolutionary” recommendations focused on clarifying the worker status issue, a new agency to facilitate streamlined support and fast-tracked resolutions, and a code of conduct that enables greater collective bargaining for workers.

While this was a state initiated inquiry conducted over two years, the report concluded that the Commonwealth is best placed to lead the reform agenda to rectify shortcomings in the gig economy.

“It was the universal view of those participating in the inquiry that any change should be led nationally. Reforms confined to a single state risk creating yet more complexity and inconsistency and could impose an unnecessary regulatory burden on national businesses,” Ms James said in the report.

“The Commonwealth is therefore best placed to deliver genuine choice, fairness and certainty for workers and business. The inquiry suggests it should grasp this opportunity to deliver the recommendations set out in this report and make balanced and fit-for-purpose revisions to the current system.”

With the Coalition unlikely to warm to the reform recommendations, the report also outlines how the Victorian government could team up with other states and territories to move ahead without the feds.

The inquiry found six key reasons why reform is needed: the inherent uncertainty of the current work status test, the fragmented and limited nature of advice and support available to workers, inaccessible resolution pathways, the conduct of platforms, high incidences of “low-leveraged workers” working under “borderline” work status and inadequate protections for non-employees.

The federal government should amend the Fair Work Act to codify work status in relevant legislation rather than relying on the indistinct common law tests as currently happens, the inquiry found.

This could be done by adapting the “entrepreneurial worker” approach so that those undertaking work as part of another enterprise or business are “employees”, and autonomous “self-employed” small business workers are covered by commercial laws.

The law will also ensure that bargaining power must be considered when considering the work status test, and that the offering of safety protections and superannuation doesn’t act as a disincentive because this leads to a change in work status, the report said.

A standalone Streamlined Support Agency should also be launched to focus on the work status issue and provide an avenue for more effective support and access to fast-tracked resolutions on issues of whether someone is an employee or not.

This agency would have dedicated and sufficient resources, be accessible to and prioritising workers, and be able to escalate complex issues to a fast-tracked resolution agency.

This body would be able to issue authoritative and binding determinations, and the onus would be placed on the gig economy companies to seek a work status determination about their business structure, rather than on the workers.

If the Commonwealth doesn’t act on these recommendations, the Victorian government could go it alone and establish such an agency, in collaboration with other state and territory governments, Ms James said.

Fair Conduct Standards should also be written to ensure greater transparency and fairness around the operation of these tech companies and how their actions impact workers, the inquiry recommended.

These standards would include principles for genuine consultation, consideration of the leverage of certain companies, fair conditions and pay and worker representation.

This is another recommendation the Victorian government could drive if the Commonwealth rejects it.

The report also recommended more stringent laws to stamp out sham contracting, and significant regulatory investment to ensure compliance with the Fair Work Act as current remedies are “not effectively deterring parties characterising a relationship as independent contracting in order to avoid the operation of work laws”.

The Victorian and federal governments are yet to respond to the report.

The federal Coalition has previously warned against regulating the gig economy, saying this could stifle innovation.

Do you know more? Contact James Riley via Email.

Leave a Comment

Related stories