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In the Gig Economy, some have stopped giggling

A recent decision by the Fair Work Commission (‘FWC’) found that a former Foodora rider was an employee rather than an independent contractor as purported by the delivery platform and therefore entitled to unfair dismissal protection.

The decision of Joshua Klooger v Foodora Australia Pty Ltd could have far-reaching impact for other gig economy companies in Australia such as UberEats and Deliveroo, which like Foodora, also classify its drivers and riders as contractors and not employees.

The FWC found, after applying a multifactorial test, that former Foodora rider Mr. Klooger was an employee and unfairly dismissed by Foodora. Foodora (now in administration) was ordered to pay Mr. Klooger $15,559 within 21 days of the decision.

Foodora dismissed Mr. Klooger for refusing to hand over control of an encrypted chat group that its workers were using to talk about pay and conditions. Mr. Klooger commenced performing work for Foodora in March 2016 until he was dismissed in March 2018.

Employee or contractor

The FWC found that the work of Mr. Klooger was integrated into Foodora’s business and not an independent operation. The FWC decided that the correct characterisation of the relationship between Mr. Klooger and Foodora was that of employee and employer.

Although the contract between Foodora and Mr. Klooger explicitly referred to Mr. Klooger as a contractor and not an employee, the FWC concluded that Mr. Klooger should have been correctly characterised as an employee. In reaching this decision, the FWC applied the standard multi-factorial test to the facts of Mr. Klooger’s relationship with Foodora.

The FWC highlighted a few key factors in its decision, namely:

  • Mr. Klooger was subject to detailed control by Foodora;
  • Mr. Klooger received time-based payments by Foodora;
  • Mr. Klooger was presented to the public as a representative of Foodora; and
  • Mr. Klooger worked to rosters set by Foodora.

The FWC then concluded that Mr. Klooger was not carrying on a trade or business of his own, or on his own behalf - instead, he was working as part of Foodora’s business.

Entitlement to unfair dismissal protection

After Mr. Klooger was deemed to be an employee of Foodora, the FWC decided that he was unfairly dismissed by Foodora. The unfair dismissal protection is generally not afforded to independent contractors, as Foodora purported Mr. Klooger to be. However, given that Mr. Klooger was, in fact, an employee, he should have not have been unfairly dismissed.

The FWC decided that the dismissal involved an entirely unjust and unreasonable process including the complete absence of any opportunity for Mr. Klooger to be heard before the decision to dismiss was made.

Future implications of this decision

It is unclear just how far-reaching this decision will impact the gig economy. However, companies such as UberEats and Deliveroo that utilise similar worker arrangements should be concerned about this decision and the precedent that it has created.

If you are a business owner that operates using contractors, this is a timely reminder to review your arrangements with workers and ensure that you are complying with Australian employment laws. This decision reinforces the FWC’s view that despite a company’s purported characterisation of its workers, it will look at the actual facts in applying the multi-factorial test.

If you have any concerns or would like to discuss any of the issues further, contact Adam Foster at Lewis Holdway Lawyers on (03) 9629 9629 or adamf@lewisholdway.com.au.