Authors:  Greg Robertson, Amelia Dowey, Liz Baradan and James El-Jalkh

18 May 2021

Australia’s second-largest food ordering and delivery platform, Menulog, has recently issued a press release announcing that it will “make a shift toward an employment model for Menulog food couriers in Australia, in order to enhance the life standards of couriers”, which will include:

• investigating avenues for employment by making an application for a new Modern Award;
• beginning an employment pilot program with couriers in the Sydney CBD; and
• increasing support of contracted couriers by increasing the current insurance cover and examining portable leave entitlements and superannuation.

Menulog’s announcement was made while the Australian Senate’s Select Committee on Job Security was underway, which was established in December 2020 to inquire into and report on the impact of insecure or precarious employment on the economy, wages, social cohesion and workplace rights and conditions.

Workers in Australia can generally be categorised into two distinct legal categories: employees, under a contract of service with their employer, or independent contractors, engaged under contracts for services with a principal. Unlike some other countries, there is no intermediate category. The distinction is significant, as independent contractors in Australia are not entitled to any of the minimum rates or conditions applicable to employees, including the minimum wage, sick leave, holiday pay, the state workers’ compensation scheme for death and injury, superannuation, overtime, penalty rates or casual loading.

Determining whether a worker is an employee or an independent contractor is a complex task, with the cases showing that the correct decision requires a multifactorial approach in the context of the “totality of the relationship”: Jiang Shen Cai trading as French Accent v Do Rozario [2011] FWAFB 8307. Among the factors which the Courts have considered are the ability to exercise control over the manner in which the work is performed, whether the worker has a right to delegate, whether the worker has a right to perform work for others, the provision of benefits such as holidays and sick leave, and whether there is good will generated for the worker.

Each case will be decided on its own circumstances. The Courts are tasked with balancing these factors and ultimately determining the totality of the relationship, and whether a worker is an employee or an independent contractor (Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 24).

There is an ever growing workforce engaged by companies such as Uber (including Uber Eats), Ola, Didi, Deliveroo, DoorDash and Menulog transporting Australians and delivering food to their doors. Decisions about their workers have sometimes come to different conclusions. As this article went to press, on 18 May 2021, the Fair Work Commission  (Australia’s national workplace relations tribunal) handed down a decision (Diego Franco v Deliveroo Australia Pty Ltd) that found a rider for Deliveroo was an employee and not a contractor. The company has indicated it intends to appeal.

In circumstances where –

• five food delivery drivers have died on Australian roads in recent months;
• Uber has made admissions itself that its riders were paid less than the minimum wage for casual workers in Australia; and
• a recent report by researchers of the University of Technology Sydney has found that rates of pay for some gig economy workers may in fact be as low as $7 to $10 an hour (where the Australian minimum wage for employees is more than $19 an hour);

– some employee-interest groups have levelled accusations at Uber, Deliveroo and others of exploiting their on-demand gig workers.

The status of workers in the gig economy is an issue of ongoing uncertainty, with Courts and tribunals struggling to apply laws governing the distinction between employees and contractors that existed well before any gig-economy companies came into existence. Can food delivery drivers riding bicycles in local suburbs really be classified as ‘independent contractors’ in the same way that a tradesperson who invests extensive capital and skill in their own enterprise would?

In Klooger v Foodora Australia [2018] FWC 6836, the Fair Work Commission found that the online food delivery brand had incorrectly classified one of their workers (the applicant) as an independent contractor, and found that the applicant was in fact a Foodora employee. In reaching this decision, the Commission considered the nature and manner in which the applicant’s work was performed and found that Foodora had considerable capacity to control the manner in which the applicant performed work, including where the applicant worked and the spread of hours the applicant worked. The Commission stated that the use of contracting arrangements that provide for the avoidance of legal responsibilities should be placed under strict scrutiny. As of August 2018, shortly prior to the handing down of the aforementioned decision, Foodora ceased operations in Australia. We have mentioned above the most recent decision that a Deliveroo rider was an employee.

In contrast, in Kaseris v Rasier Pacific V.O.F. [2017] FWC 6610, the Commission held that an Uber driver was correctly classified as a contractor, and in Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a Uber Eats [2020] FWCFB 1698 (“Gupta”), the same decision was reached for an Uber Eats driver. An appeal to the Full Bench of the Federal Court in the Gupta case was quickly settled, thus avoiding the possibility of a decision that Uber Eats workers were in fact employees, and potentially the collapse of Uber Eats’ entire business model as a result of such a finding.

The recent UK decision of Uber BV v Aslam [2021] UKSC 5, where the Supreme Court unanimously held that certain Uber drivers were “workers” for the purposes of the Employment Rights Act 1996 (UK), possibly influenced the decision by Menulog, Australia’s second-largest food ordering and delivery platform, to trial an employment model based on minimum wages and employment conditions in Sydney’s CBD. This announcement indicates a willingness to accept greater responsibility for the welfare and the protection of the rights of gig economy workers. This decision also marks the beginning of the shift away from insecure and precarious employment relationships in Australia’s gig economy.

Classifying delivery drivers as employees will ensure that they are not left outside the protection provided by the National Employment Standards, which set out the minimum employment entitlements in Australia, and modern awards, which are decisions of the Fair Work Commission that outline the minimum pay rates and conditions of employment in Australia. Delivery drivers who are classified as employees would be entitled to a range of protections that are not available to independent contractors, such as classification-based wage rates, additional payments for work outside of standard hours or on public holidays, overtime for additional hours, dispute resolution procedures, consultation procedures and minimum engagement periods.

Menulog has recognised that it may face several challenges if the move to an employment model is made. To avoid unintended consequences that may arise if the restrictions in existing awards are applied to delivery drivers, Menulog indicated that it intends on making an application to the Fair Work Commission for a new modern award covering the on-demand industry.

The tide may be turning for companies operating in the on-demand gig economy. It may well be that Menulog has decided to confront that changing tide head-on. Whether such a move will be to their benefit or demise is something only time can tell.