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According to the Fair Work Ombudsman, Uber drivers are no longer considered employees. After a gruelling two-year investigation into the rideshare app, it was decided drivers were lawfully classified as independent contractors.
While Uber has breathed a sigh of relief, the decision has left their drivers unhappy as it means they are not eligible for employment-related entitlements, such as paid leave.
What is an independent contractor?
Independent contractors differ from employees based on a number of factors, with one of the main ones being that they are required to have an ABN and pay their own tax and GST to the Australian Taxation Office. Some other factors include:
- They are required to pay their own superannuation;
- They use their own tools and equipment;
- They get to decide what hours they wish to work; and
- They have a high level of control in how they complete the work
How was this decision determined?
When determining this decision, The Ombudsman examined a myriad of evidence including:
- Log on and log off records
- Drivers’ contracts
- ABN documents
- Payment statement
- Banking records
- Pricing schedules
A number of interviews were also undertaken with both drivers and Uber Australia, and after all the above was considered, the conclusion was made that Uber drivers have a unique level of control over their work, given that they can pick and choose jobs as they please. As well as this, Uber drivers pick their own hours, length of work and in fact if they worked at all.
This, of course, should be considered critically as casual employees also have the right to accept or reject work of their choosing. Attention should be focused on all aspects of the worker and contractor relationship.
What about other similar apps?
The decision was somewhat surprising following the findings in relations to Foodara, a similar on-demand service used for food delivery, was found by the Ombudsman to be incorrectly correctly categorising its workers as contractors rather than employees. The decision led to the closure of Foodora in Australia. A similar decision was found in the UK where rideshare drivers were deemed employees in the court of appeal. However, in the US the Labor Relations Board mirrors the Ombudsman’s decision on Uber here in Australia.
Can Uber drivers challenge this decision?
Whilst Uber got off this time, it must be noted that this was not a court decision. Individual drivers still have the power to challenge Uber on any law they feel is being breached, however, the regulator itself cannot pursue charges to do with non-compliance of Australian employment laws.
As the gig economy as a whole continues to grow, especially for younger people, many questions are being raised about how we define employment and where that fits in with our social welfare and taxation system. There is no uniform response, given the differing decisions from the Fair Work Commission, what is clear from the decisions being handed down is that each service must be closely examined and looked at according to its own merits.
For more information on this decision, or to find out your rights and obligations as an independent contractor, get in touch with one of our expert employment lawyers.
Cairns Employment Lawyers is a division of Preston Law, Cairns largest law firm.