# The Fair Work Commission has found that Deliveroo riders are employees in a landmark ruling that could have 'huge implications' for gig workers



## Jack Malarkey (Jan 11, 2016)

_Business Insider Australia_




Redirect Notice




*The Fair Work Commission has found that Deliveroo riders are employees in a landmark ruling that could have 'huge implications' for gig workers*









JACK DERWIN
MAY 18, 2021



*The Fair Work Commission (FWC) has made a landmark ruling that could see a renewed push to recognising delivery riders as employees.*
*The FWC ruled on Tuesday that former Deliveroo rider Diego Franco was more akin to an employee than a contractor before he was dismissed for “no valid reason”.*
*Transport Workers Union (TWU) national secretary Michael Kaine said “this ruling has huge implications for gig workers in Australia and we urge the Federal Government to look at it today and to start devising regulation now.”*

A landmark judgement may have major repercussions in Australia, after the industrial relations tribunal found a gig worker to be an employee rather than a contractor.

The Fair Work Commission ruled in favour of former Deliveroo rider Diego Franco on Tuesday, finding that he had been unfairly dismissed last year by the company.

The case, which has been ongoing for months, centred on whether or not Franco as a delivery rider could legitimately be classed as a contractor. Gig workers for companies from Uber and DiDi to Deliveroo have been at the centre of this debate worldwide. Without defining workers as employees, companies have avoided having to grant workers a range of rights in the pursuit of profit, and have fought to maintain the contractor classification.

On Tuesday however, the Fair Work Commission recognised this ambitious legal status many thousands of workers occupy and appeared to find that they are closer to employees than contractors.

“In this case, when consideration of all the relevant indicia, has, like the colours from the artist’s palette, emerged to form a complete picture, the correct characterisation of the relationship between Mr Franco and Deliveroo is that of employee and employer.

“Although, the picture is impressionistic and not precise, it is nevertheless a compelling conclusion,” the Commission found.

“Mr Franco was not carrying on a trade or business of his own, or on his own behalf. Instead, he was working in Deliveroo’s business as part of that business.”

In fact, the Commission specifically ruled against arguments that have long been used by companies operating in the gig economy, including that because workers can work for competitors, they must be contractors.

In “the context of a modern, changing workplace impacted by our new digital world”, the Commission found this was insufficient justification.

Deliveroo told Business Insider Australia the company would be appealing the 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,” a spokesperson said.

“We are confident that riders are engaged as independent contractors. Riders have the absolute freedom to decide whether, when and where they work, and if they do go online they can decide how long to work and can freely reject any offer of work offered to them. Riders don’t need to provide personal service – they can and do use delegates to complete deliveries. Riders can and do work with multiple platforms, including competitors, at the same time – as Mr Franco did himself.”

Its reasoning though has now been wholly refuted by the FWC in a decision that was welcomed by the Transport Workers Union (TWU), which has represented the Brazilian since he filed an application 12 months ago.

“This is an important judgment 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. This ruling has huge implications for gig workers in Australia and we urge the Federal Government to look at it today and to start devising regulation now,” TWU national secretary Michael Kaine said in a statement.

*Deliveroo rider had rights *

The decision means that Franco was working as an employee at the time he was booted off the app at the beginning of the pandemic, giving him claim to unfair dismissal.

The Commission found that Deliveroo had “no valid reason” for getting rid of Franco and that his dismissal was “harsh, unjust and unreasonable”. It also ruled that regardless of their legal status, Deliveroo cannot dismiss workers so flippantly.

“Irrespective of whether Mr Franco was a contractor or an employee, it was plainly unconscionable to terminate what would be well understood to be his primary source of income, without first hearing from him. The capacity to undertake a detailed analysis of Mr Franco’s performance statistics should not remove the human factor.”

Deliveroo will now be required to reinstate Franco on its app and pay lost income to him.

Kaine noted that Franco “wasn’t given a chance to argue his case and was left struggling to support his wife and baby daughter” when he was dismissed. The often vulnerable position of gig workers and their mistreatment has become an inextricable part of the gig economy debate.

“The treatment of gig workers isn’t just unfair, it is deadly. Riders work under the spectre that they may get sacked at any moment and are forced to risk their lives to make deliveries quickly,” Kaine said.

“Between September and November five delivery riders died while working. We want the Federal Government to regulate in the right way and to put in place a tribunal with full powers to regulate on gig workers’ rights and protections.”

*Policy is running behind platforms *

Courts and policymakers alike have been playing catch up when it comes to the gig economy, which exploded into the public consciousness with the arrival of Uber.

The emergence of dozens of ‘on-demand’ businesses, servicing everything from food and parcel delivery to transport, has made the informal sector ubiquitous. Often attracting international students, and foreign workers, a debate has raged on how they fit into existing legal work arrangements.

Last week Victoria agreed to all 20 recommendations of its own gig economy inquiry, chastising the federal government in the process for not taking action sooner. The move would see the state clarify the employment status of workers and determine minimum standards and entitlements.

At the same time, Menulog has spoken of the ‘moral imperative’ of paying workers a minimum wage, as it announces a Sydney trial to test a new model of on-demand work.

Similarly, the UK has made legal challenges of its own, forcing Uber to pay UK workers at standard rates and grant them new rights.

Tuesday’s ruling in Australia may be yet another move closer to delivering rights for workers here.


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## Jack Malarkey (Jan 11, 2016)

Copy of the Fair Work Commission decision:



[2021] FWC 2818 [Note: This decision and the associated order has been quashed – refer to Full Bench decision dated 17 August 2022 [2022] FWCFB 156]




[2021] FWC 2818*FAIR WORK COMMISSION**DECISION*

_Fair Work Act 2009 _
s.394 - Application for unfair dismissal remedy

*Diego Franco
v
Deliveroo Australia Pty Ltd*
(U2020/7066)



COMMISSIONER CAMBRIDGE


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## UberDriverAU (Nov 4, 2015)

Interesting. The Commission seems to have used a more "modern" approach in arriving at their judgement, and hasn't arrived at any nonsensical conclusions like it did in the Gupta case. I still don't get how it could be found she wasnt working in anyone's business. 🤷🏻‍♂️


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## Zuständig (Aug 31, 2019)

Thank you @Jack Malarkey for that comprehensive post.

I've always felt that the business model for Uber/ Didi/ etc is wrong if they're going to dictate terms such as fares to their drivers, yet still make the claim that they're working as "independent contractors". If that was truly the relationship, then a different system (more open market) would be to allow drivers to "bid" for a fare or set their own per km rate. Uber etc then acts as a true intermediary and there's no contract established until the passenger accepts.

Anyway, this is a good outcome and as stated, one that has considered the "complete picture". Unfortunately, Deliveroo have already indicated that they will appeal and there remains legal ambiguity. The only way to get REAL CHANGE is LEGISLATIVE REFORM. There is a Federal election pending, if not this year at the latest by September 2022. *This is the time to get active! *We will have considerable exposure to politicians and their staff/ advisors over the next 5 to 15 months, either on the job or around the shopping centres & High Streets around Australia. Don't be afraid to talk to the candidates & others about what's wrong and what type of reform is needed. And be prepared to vote accordingly.


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## Zuständig (Aug 31, 2019)

An opinion piece in the New Daily today.


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## Jack Malarkey (Jan 11, 2016)

Article by Thomson Geer, lawyers:






FWC delivers shock to Deliveroo - Employment Blog - Thomson Geer


Last week the FWC delivered its latest ruling on whether a Gig Economy worker was an 'employee' for the purposes of an unfair dismissal claim.




www.tglaw.com.au






*FWC delivers shock to Deliveroo*

*Piers Mitchem and India Mauritzen

26 May 2021*

Employment Disputes

A recent Fair Work Commission decision has put algorithms front and centre in the contractor/employee battle, by finding that Deliveroo’s ability to ‘control’ a worker using its algorithm weighed heavily in favour of an employment relationship.

*Overview*

Last week the Fair Work Commission delivered its latest ruling on the question of whether a Gig Economy worker was an ’employee’ for the purposes of an unfair dismissal claim.[1] The decision is significant in three ways:

first, it is sure to raise eyebrows because – amid a relatively large number of unfair dismissal cases brought by Gig Economy workers – it’s only the second time the Commission has decided that the worker is an ’employee’ (and therefore entitled to the protection of unfair dismissal laws). The decision won’t be binding on future unfair dismissal cases, but it _will_ be influential, and it shows just how thin the line can be between being a genuine ‘contractor’ or a deemed ’employee’;
second, it involves close assessment about whether (in the Commission’s view) the worker was genuinely running his own ‘entrepreneurial’ business independently of Deliveroo; and
third, it demonstrates that the courts and tribunals are developing a far more nuanced understanding of how company algorithms can be used to ‘control’ the behaviour of their workers (thereby indicating an ’employment’ relationship), and as algorithms are increasingly used to influence and direct worker behaviour, this will almost certainly have wider implications for the future categorisation of workers.
*So – what happened?*

Diego Franco worked for Deliveroo as a contract delivery driver from early 2017 until April 2020, when Deliveroo abruptly terminated his account for ‘failing to deliver orders in a reasonable time.’[2]

Franco booked all of his delivery orders through the Deliveroo app which, during much of his engagement, used an algorithm that preferentially allocated work to delivery riders based on their individual performance metrics.

These metrics included their ranked attendance rate, how many cancellations they had made at short notice, and their preparedness to work during peak times. A higher performance ‘rating’ resulted in (among other things) the ability to book work at preferred or optimal shift times when demand (and hence potential earnings) was typically higher.

Deliveroo also used data analytics software to log and compare rider delivery times, allocating a score to individual riders. Those whose low score deemed them to be too slow faced further investigation and, ultimately, termination of their engagement. It was this process that ultimately led Deliveroo to determine that Franco was slower than the other riders working in his zone and as a result to terminate his services.

Backed by the Transport Workers’ Union, Franco challenged his termination by filing a claim in the Fair Work Commission arguing that (despite ostensibly being an ‘independent contractor’) he was in fact Deliveroo’s ’employee’ and therefore protected by unfair dismissal laws.

*The Commission’s finding – algorithms and the importance of ‘control*’

When asked to determine whether a contractor is in fact a legal ’employee’, the courts (and in this case the Commission) assess the relationship against a range of factors, one of which is the degree of ‘control’ exercised over the worker. The more control that is exercised (or is capable of being exercised) the more likely that the worker is an employee.

Deliveroo argued that Franco wasn’t its employee because it didn’t control when or where he worked, or for how long he worked. It also argued that he could freely accept or reject delivery orders as he pleased, and (at least in principle) assign others to work in his place.

However, the Commission reasoned that while Franco may have _appeared _to operate relatively independently, the ‘practical reality’ of Deliveroo’s preferential allocation system meant that, to have any reasonable opportunity of earning an income, he was compelled to make himself available and to work at certain times, and not to cancel booked engagements.

In this way, Deliveroo’s collection of individual performance metrics and other rider data (such as delivery times) in substance gave it an ‘extraordinarily vast repository’ of material that it could exploit to ‘exercise a significant level of control’ over its workers.

The Commission reasoned that this reality, combined with other considerations, meant that Franco was, on balance, Deliveroo’s ’employee’ and entitled to protection from unfair dismissal.

This included the fact that Franco wore a Deliveroo uniform and had no capacity to negotiate the terms of his engagement, and could not possibly have developed any business ‘goodwill’ as a delivery rider independent of Deliveroo.

*What does the decision mean?*

The degree of ‘control’ over a worker will not on its own determine whether they are an ’employee’, but it does play a major part in that assessment.
What’s truly remarkable about this case is that, while previous decisions have taken into account the role that software platforms can play in influencing behaviour, few have considered algorithms in such an explicit and decisive way.

The decision shows that courts and tribunals are developing a far more nuanced understanding of software platforms, and are likely to more readily reject the common claim by Gig Economy companies that they are merely software platforms that facilitate an exchange of services.

Further, whilst algorithms are at the heart of the Gig Economy model, the rise of ‘algorithmic management’ means that they are increasingly being applied in other workplaces. The decision therefore underscores the fundamental challenge many businesses are going to face in correctly categorising employees as ’employees’ or ‘independent contractors’.

Deliveroo has vowed to appeal the decision. This is perhaps unsurprising, given the implication that many of its other delivery riders may also be ’employees’ and hence qualify for minimum wage, leave entitlements and protection from unfair dismissal (among other things).

But this isn’t without risk – as part of the appeal, it’s highly likely that the Commission will end up conducting a more forensic examination of Deliveroo’s algorithms and a further exploration of the degree to which they ‘control’ worker behaviour. We’ll be watching this space closely.
Our previous articles on decisions in the employee/contractor space can be found here, here and here.

...

[1] _Diego Franco v Deliveroo Australia Pty Ltd _[2021] FWC 2818.

[2] _Diego Franco v Deliveroo Australia Pty Ltd _[2021] FWC 2818 at [33].


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## Sandhills (Feb 9, 2018)

Regulators are often slow but the tide is turning 



Uber Set to Recognize U.K. Union While Keeping Worker Model


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## Senti-Ant (Jan 17, 2020)

I was suprised that Diego's case hadn't resulted in a repeat of the 2018 Foodora situation where the company suddenly had to pay all its riders backpay for overtime and superannuation, but apparently the company is continuing to challenge the decision through the legal system so looking forward to the next update!


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