Foodora decision could affect contractors everywhere

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Recent media attention around a recent Fair Work decision has called contractors in business into question.

The decision was around an unfair dismissal claim by a delivery driver. Normally, the Fair Work Commission (FWC) would not have jurisdiction to decide on the claim unless the applicant could show he was an employee. Ultimately, the FWC rule the applicant was indeed an employee.

The facts of the case

The applicant had signed a service contract that said he is employed as an independent contractor and not an employee. The service contract provided for him to receive $14 for each hour, plus $5 per delivery.

To work, the applicant logged into his ‘shifts app’ that displayed available shifts for each week.

The shifts had a start and finish time with a specific geographic allocation where the delivery work would occur. The applicant would accept the particular shifts that he could work and commit to undertake the selected shifts in the geographical location.

While the contract said that the contractor was not an employee, the FWC thought many provisions were similar to those found in an employment contract.

Contractor vs Employee

The FWC listed the following points as why the relationship was employment:

  • Foodora had the capacity to control the manner in which the applicant performed work. It fixed the place of work and the start and finish times of each engagement or shift. 
  • The applicant did not have a separate place of work, nor did he advertise his services.
  • He did not have a substantial investment in the capital equipment that he used to perform his delivery work. The bicycle that he used for delivery work was also used for non-work-related bicycle activities.
  • Foodora presented the applicant as an employee. The applicant would dress in Foodora branded attire, and utilise equipment displaying the livery of the Foodora brand.
  • The applicant was paid on a regular basis in respect to the completed shifts within each week.
  • The conduct of the applicant in his work for Foodora would potentially create (or damage) its goodwill.
  • The applicant did not spend a significant proportion of his remuneration on business expenses.

Based on this, the FWC ruled the applicant was not carrying on a trade or business of his own. The applicant was working in Foodora’s business as a part of it.

Do you use contractors?

The decision has called into question whether a contractor is actually employed as one or can be classed as an employee depending on their conditions. 

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