An employee by any other name: FWC delivers decision in Foodora test case

The Fair Work Commission (FWC) has handed down a significant decision for the gig economy, finding a rider working for the app-based food delivery company Foodora Australia Pty Ltd (Foodora) was engaged as an employee and that he was unfairly dismissed.

Joshua Allan Klooger (Klooger) had been employed by Foodora as a delivery rider pursuant to a binding agreement titled “Independent Contractor Agreement” (Agreement). Klooger was dismissed in March 2018 for making a public complaint about the rates paid to new delivery riders.

In finding Klooger was actually an employee of Foodora (rather than an independent contractor) the FWC was persuaded by the following factors, emphasising that no single factor was or can be decisive:

  • The Agreement included several provisions which were more typical of an employment agreement.
  • Foodora had significant capacity to control the manner in which Klooger performed work, his place of work and his start and finish times for shifts.
  • Although Klooger performed work for other delivery companies, it was limited and there was evidence to suggest that it was difficult in practice.
  • Klooger did not have his own place of business and did not advertise his services to the world at large. Rather, Foodora’s model involved holding Klooger out as a representative of its business.
  • Klooger had not substantially invested in the principal equipment he used to perform his work.
  • Klooger was paid on a regular basis for the completed shifts within each week.
  • Klooger’s conduct in his work for Foodora would potentially create goodwill or possibly, it could damage the public standing of Foodora.

This finding was made despite the following circumstances which are more typical of a contractor arrangement:

  • Foodora did not deduct income tax from the remuneration paid to Klooger.
  • Klooger’s work did not involve an established profession, trade or distinct calling.
  • Klooger was not provided with paid entitlements including holidays or sick leave.

Having established there was an employment relationship, the FWC found that Foodora did not have a valid reason for the dismissal of Klooger relating to his capacity or conduct and awarded compensation.

Lessons for employers (especially those in the ‘gig’ industry)

  • The decision of the FWC in this case is one of the very few decisions of Industrial Tribunals or Courts in Australia which has so far considered the application of the existing law regarding the distinction between independent contractors and employees to the gig economy.
  • Whilst it is clear, and as the FWC recognised in this case, that contracting and contracting out of work are legitimate practices which are important components of a range of business and commercial activity, there are risks associated with the implementation of such arrangements in new areas and new types of work.
  • Whilst the FWC decision in the Foodora case is not a landmark decision, it is a significant pointer to those engaged in the gig economy to apply scrutiny to the characterisation given to particular working relationships. Failure to do so will inevitably lead to further involvement and intervention by the Courts.

For more information on workplace agreements, especially in the ‘gig’ economy, please contact our Employment, Safety and Migration team.

This article was written by Barney Adams, Associate – Employment, Safety and Migration and Stella Gehrckens, Law Graduate.