In the latest case about workers in the “gig economy”, an Uber Eats driver has been found to be an independent contractor, rather than an employee of Uber Eats. (See: Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a Uber Eats)
In upholding an earlier decision of the Fair Work Commission, the Full Bench of the Fair Work Commission looked at the 13 factors that the Commission had assessed in determining the question of whether an Uber Eats driver (Ms Gupta) was an employee or a contractor.
These factors are summarised below, together with the Commission’s findings. For any businesses that currently engage contractors, it may be useful to consider whether these factors point to a contractor or employee relationship in your business.
|Factor||Finding||Contractor or Employee?|
|Control||Ms Gupta had significant control over the way she wanted to conduct the services she provided, including when she worked, how long she worked, what delivery requests she performed, the type of vehicle she used and how the vehicle was operated and maintained. Uber Eats had a measure of “soft control”, including through the rating system, its capacity to suggest the route to be taken and its setting of the maximum delivery fee, but these were common business efficiency rules and not of themselves strong signals of any particular type of relationship.||Contractor|
|Entitlement to work for others||Ms Gupta had the express and practical right to use other food delivery systems and to use her vehicle for other services, although there were practical limitations on her capacity to accept requests from multiple apps at the same time.||Contractor|
|Separate place of work and advertising of services||Mr Gupta undertook work in and around her vehicle, visiting restaurants and delivering to the premises of customers. There was no evidence that she advertised her services or had the practical scope to generate work as an individual. This was a neutral consideration.||Neutral|
|Provision and maintenance of tools and equipment||Ms Gupta provided and maintained her own capital equipment. She was provided with an insulated delivery bag which was subject to a refundable deposit that was deducted from her payments, which she could have provided herself if she wished.||Contractor|
|Entitlement to delegate or sub-contract work||There was no formal right for Ms Gupta to delegate or sub-contract the work.||Employee|
|Right to suspend or dismiss||Uber Eats had the right to suspend or conclude the relationship on certain grounds. This was a right that tended to exist in any business or employment relationship, and the right to suspend did not sit well with the concept of employment.||Contractor|
|Public presentation:||Ms Gupta did not and was not permitted, to display any Uber Eats signage on her vehicle, and was not required to and did not wear any Uber Eats uniform or identification. However, the marketing and provision of the service by Uber Eats contemplated that a deliverer arranged using the Uber Eats system would deliver the meal.||Neutral|
|Deduction of income tax and GST:||Ms Gupta was required under the Service Agreement to deal with any applicable GST, and Uber Eats did not deduct income tax from the payments made to her.||Contractor|
|Provision of invoices and periodic payment||Invoices were generated by Portier Pacific (one of Uber’s entities) on behalf of Ms Gupta, and although the parameters of the delivery fee were, in effect, controlled by Uber Eats, Ms Gupta had the capacity to negotiate a lower fee, to accept or reject particular delivery requests, and to dispute the delivery fee calculation.||Contractor|
|Paid leave||There was no provision of any paid leave, but in the circumstances, this factor was of little assistance.||Neutral|
|Nature of the work||The work did not involve a profession, trade or special calling||Employee|
|Creation of goodwill and other saleable assets||Ms Gupta did not have the capacity to generate goodwill or any saleable assets||Employee|
|Proportion of remuneration spent on business expenses||There was little evidence about this. There was little by way of “business” expense in relative terms apart from the operating costs of the vehicle and the mobile phone.||Neutral|
The Full Bench’s decision
Despite finding that there were a number of factors that pointed to an employment relationship, the Full Bench determined that overall the relationship was one of a contractor rather than an employee.
It placed particular weight on three factors:
- Uber Eats had no control over when or how long the driver performed her work;
- The driver able to perform work for others (i.e. Ms Gupta could accept work through other competitor food delivery apps or perform other types of passenger or delivery work);
- The driver was not presented as part of Uber Eats (Ms Gupta was not required to wear a uniform or represent she was part of Uber Eats).
Lessons for employers
The decision highlights the complexity of determining whether a worker is a genuine contractor or an employee. Following this decision, it appears that where:
- A business has a high degree of control over when the worker performs their work (e.g. if they are required to perform the work during office hours or on particular days/times);
- The worker is not able to perform work for others;
- The worker is presented as part of the business (e.g. they use a business email address, have business cards or where a uniform);
then it is likely that such a worker will be deemed to be an employee rather than a contractor.
The consequences of wrongly classifying such a worker as a contractor (when they should be an employee) can be severe: businesses can be liable for significant financial penalties for “sham contracting” as well as having to backpay employee entitlements (paid leave, minimum wages, notice, redundancy, etc).
A reminder about superannuation
Businesses should also be aware that even genuine contractors are entitled to superannuation payments from the companies that engage them where the contractor is engaged:
- under a verbal or written contract that is wholly or principally for their labour – that is, more than half the dollar value of the contract is for their labour (rather than for equipment or materials);
- for their personal labour and skills – which may include physical labour, mental effort or artistic effort – and not to achieve a result; and
- to perform the contract work personally – that is, they are not able to delegate the work to others.
Need further help?
We have developed a free checklist to help you determine whether your workers are genuine contractors or not and whether they would be entitled to superannuation payments.
Please contact EI Legal if you require any assistance with matters relating to engaging contractors.