In a decision that will further put the gig economy under the spotlight, the Fair Work Commission (FWC) in the case of Diego Franco v Deliveroo Australia [2021] has found that a Deliveroo rider was an employee of Deliveroo and was eligible to bring an unfair dismissal claim against the food delivery company.  Deliveroo had maintained that the worker was an independent contractor and was therefore ineligible to pursue an unfair dismissal claim.

Further, the dismissal was found to be unfair and the FWC ordered reinstatement and compensation for lost earnings.

Facts

Mr Franco worked as a Delivery Rider with Deliveroo for 3 years. He wore Deliveroo uniform but chose when and where he wanted to work and logged onto Deliveroo’s system. He also worked for Deliveroo’s competitors and was able to engage others to complete his deliveries. Mr Franco supplied his own motorbike and mobile phone in performing his duties. In April 2020 Deliveroo terminated Mr Franco’s engagement (labelled as a’ supplier agreement’) due to the timing of his deliveries.

Mr Franco, with assistance from the Transport Workers Union filed an unfair dismissal claim. Deliveroo objected to Mr Franco’s application on the grounds that he was not an employee but rather an independent contractor.

Employee or not?

The question of whether a relationship is one of employer/employee or principal/contractor has been the source of a lot of litigation throughout Australian legal history. New technologies and new ways of working have brought this issue back to front and centre of legal systems everywhere.

The FWC applied the established multifactorial test in examining the relationship between Mr Franco and Deliveroo.

The FWC made the following observations when considering the various factors and the totality of the relationship:

  • although Mr Franco could choose when he worked for Deliveroo, for a significant period of his engagement he was required to indicate his intention to work in advance and preferential treatment was given to Deliveroo riders based on work performed during busy periods and meeting metrics determined by Deliveroo
  • Deliveroo’s data collected on riders led to their capacity to control them and assess their performance
  • working for more than one employer (or principal) at the same time, does not preclude the arrangement being one of employment due to advances in technology
  • Mr Franco had no capacity to negotiate any of the terms of the supplier agreement
  • even though Mr Franco did not use the option of subcontracting the work he still had the capacity to do so
  • Deliveroo encouraged their branded attire and equipment to be used
  • there was no prospect for Mr Franco to develop any goodwill or tangible value to his business as a ‘rider for hire’.

Ultimately, the FWC concluded that Mr Franco was not carrying on a trade or business of his own, but was instead working for Deliveroo as their employee.

This finding has significant implications for Deliveroo’s other contract delivery ‘contractors’ and no doubt would be causing a few sleepless nights for other App based delivery providers as well.

What now?

Deliveroo has already confirmed its intention to appeal the decision – so watch this space!

It’s now more important than ever to ensure the model of engagement of your people complies with your current legal obligations. Avoid the risks associated with these complex decisions and chat with one of our experienced team members to discuss the most appropriate model of engagement for your business.


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