By Alex Millman and Lindsay Carroll, NRA Legal

On Friday 16 November 2018, the Fair Work Commission handed down its decision in an unfair dismissal claim against food delivery app service Foodora.

The case, brought by former Melbourne Foodora rider Mr Josh Klooger with the assistance of the Transport Workers’ Union, has garnered significant media attention, with Mr Klooger appearing on Channel 10’s The Project both before the claim was lodged (an appearance which led to his dismissal) and after the decision was handed down.

The media has made various efforts to make this case sound like the beginning of the end for the app-based gig economy. However, despite the hype, this case changes nothing.

Klooger v Foodora Australia Pty Ltd [2018] FWC 6836

Why the hype?

Australia’s industrial relations system has been grappling with the rise of app-based gig work since it first arrived on our shores. At first, platforms such as Uber seemed like a gold mine, with drivers earning more than they would have as a driver under the modern award system, and forgoing the substantial set-up costs of a taxi.

However, as more and more people started using these apps, the amount of work available per person began to lessen, and suddenly the dream run was over, with drivers now sometimes earning less than the minimum wage.

With this dissatisfaction came efforts to win some form of redress.

In 2017 Mr Michail Kaseris, an Uber driver, lodged an unfair dismissal claim in the Fair Work Commission. He lost, the Commission determining that he was not an ‘employee’, but an ‘independent contractor’, and therefore not covered by the Fair Work Act.

Some months later, Mr Janaka Pallage also challenged the termination of his arrangement with Uber in the Fair Work Commission. Again, the Fair Work Commission determined that Mr Pallage was not an ‘employee’ and therefore the Commission could do nothing.

So when Mr Klooger’s case was brought before the Fair Work Commission, it looked set to be more of the same. However, Commissioner Cambridge held that, looking at the arrangement between Mr Klooger and Foodora, there was just enough to tip Mr Klooger over the line into being an employee instead of a contractor.

The unchanged test

In determining Mr Klooger’s case, Commissioner Cambridge applied the same test as had been applied to the cases of Mr Kaseris and Mr Pallage, called the ‘multi-factor test’.

This test is not new – it was first propagated by the High Court in 1986 in the case of Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, and added to over the years by cases such as Hollis v Vabu Pty Ltd t/a Crisis Couriers [2001] HCA 44, Abdalla v Viewdaze Pty Ltd (2003) 122 IR 215, and Jiang Shen Cai t/a French Accent v Rozario [2011] FWCFB 8307.

Bound by these higher authorities, Commissioner Cambridge did nothing but apply the existing law to the case before him.

The multi-factor test: why Foodora was different

The mutli-factor test looks at the various elements of the relationship between the employee/contractor and the employer/principal to make an assessment, on balance, as to whether the applicant is an employee or a contractor.

In the cases of Mr Kaseris and Mr Pallage, both were found to be contractors largely due to the Uber app linking them to particular ‘jobs’, the control they had over when they worked as drivers for Uber, and that they were not required to use any external branding of Uber.

In Mr Klooger’s case, Foodora did not assign him to particular ‘jobs’, but rather assigned him a ‘shift’ in a specific geographical area, not unlike a roster for a casual employee. Foodora also represented Mr Klooger, and its other riders, as being part of its business rather than as a separate independent business, requiring Mr Klooger to wear Foodora branding and referring to him (and other riders) as “our riders”.

Substantially thanks to these indicia, Mr Klooger was held to be an employee, and was awarded $15,559 less taxes as compensation for unfair dismissal.

Don’t open the floodgates just yet

Despite being a victory for workers against app-based gig work, the Foodora case is by no means the beginning of the end for the gig economy.

Foodora’s case clearly rested heavily on its own facts, rather than any change to the law; if Uber was brought before the Fair Work Commission again, it is likely that Uber would still win.

The case has, however, highlighted areas where other apps may run into trouble. Deliveroo, for example, may struggle more than Uber in front of the Fair Work Commission because of its riders’ use of its brightly-branded delivery packages – a key point of difference between the Uber cases and the Foodora case.

What we are likely to see coming out of this case is these app-based services revising the terms of the engagement with their drivers/riders to ensure that the multi-factor test is determined in their favour.

Will the law change?

The multi-factor test applied by the Fair Work Commission in these cases is not found in any law made by Parliament; it is instead found in cases heard and determined by the courts and commissions.

With the test having its genesis in the High Court, it will not change unless:

  • the High Court hears a similar case again, and decides to re-visit the multi-factor test; or
  • Parliament legislates in some way as to change the test or make it redundant.

Since the High Court will only hear such a case on appeal, and appealing an unfair dismissal decision even to the Full Bench of the Fair Work Commission is reasonably difficult, it is unlikely that the High Court will be making any changes to this area of law any time soon.

The gig economy is something of a hot political topic at the moment, with the Senate Select Committee into the Future of Work and Workers recommending legislative change to accommodate technological disruption. The Victorian Government also recently launched its own inquiry into the gig-economy, headed by former Fair Work Ombudsman Natalie James. The gig-economy was also raised during the Queensland Government’s inquiry into wage theft, although it was technically outside the scope of the inquiry.

With all of these inquiries being substantially driven by Labor, it is likely that legislative regulation of the gig-economy will be on the agenda should Labor win the next Federal election, which currently looks likely to be held in May 2019.

If you have any questions, queries, or concerns about the potential impact of this case or any legislative proposals, please contact NRA on 1800 RETAIL (739 245).

NRA is currently seeking expressions of interest from members who want to be involved, directly or indirectly, in the Victorian inquiry, so please let us know if you would like to be involved.