Legal

“Closely monitor developments”: Deliveroo sham contracting case to be closely watched

Matthew Elmas /

The federal government has indicated it will not intervene in an ongoing court battle between Deliveroo and one of its former workers, who is alleging the delivery giant engaged in sham contracting.

One of Deliveroo’s former delivery drivers, Canberra-based Jeremy Rhind, has taken the on-demand platform to the Federal Circuit Court, alleging he was paid below the minimum wage and was effectively an employee of the company, not a contractor.

The case is expected to have wide-ranging consequences, particularly for where gig economy workers fall under Australia’s workplace laws, with ongoing disagreement over whether riders are contractors, as Deliveroo maintains, or employees, as the Transport Workers Union (TWU) argues.

The union, which is providing legal support to Rhind’s Federal Circuit Court bid, has called on Industrial Relations Minister Christian Porter to intervene in the case, saying the government has “sat on its hands” over the issue of gig economy workers in recent years.

But Porter indicated the government will not intervene, saying in a statement on Wednesday tests which distinguish contractors from employees are already “well established”.

“This issue is before the courts and as such, is a matter for the respective parties, however, the Government will closely monitor developments,” he says.

“Whether someone is an employee or a contractor depends on the facts and circumstances of each case, with the tests supporting this distinction well established under the law.”

Porter did not respond to questioning about whether the status of gig economy workers would be considered in the government’s ongoing review of workplace laws.

Workers, business owners, or both?

Speaking at a TWU press conference in Canberra on Wednesday, Rhind and several other Deliveroo riders complained about their working conditions.

“I’m an employee,” Rhind said.

Deliveroo paid Rhind $9 per delivery, which he alleges averaged out to about $10.50 an hour over about 10 months.

At the time the hourly minimum wage was $19.49.

Rhind also alleges he missed out on several thousand dollars worth of entitlements, including penalty rates and superannuation.

Deliveroo, alongside UberEats, maintains its riders are contractors (and thus business owners), and so are not entitled to annual leave or superannuation.

Michael Kaine, TWU national secretary, argues Deliveroo treats riders like employees.

“Companies like Deliveroo are involved in the biggest sham that the modern economy has ever seen,” Kaine said.

Rhind’s legal bid is expected to hinge on the degree of control Deliveroo exercises over its contractors, specifically how the company influences when riders start, and for how long they work.

After all, the question here is whether Deliveroo is hiring contractors which are, in practice, functioning as employees.

A Deliveroo spokesperson said its more than 8,000 contractors across the country benefit from flexibility.

“On average Deliveroo riders in Australia work 15 hours a week, earning over $22.00 per hour on average, fitting riding around study, hobbies, caring responsibilities or other work. We will always defend riders’ ability to choose to work this way,” the spokesperson said.

“If riders were employees the flexibility they enjoy today would be removed and they would have to work exclusively for Deliveroo in fixed shift patterns, which is not the way of working riders tell us they want.”

This is just the latest controversy to erupt between an on-demand platform like Deliveroo and its drivers. UK-headquartered Foodora left the Australian market last year after the Fair Work Ombudsman (FWO) took it to court over sham contracting allegations.

Sham contracting, where an employer disguises an employment relationship as an independent contracting arrangement, is illegal.

But, as the Fair Work Act — passed five years before Deliveroo launched in Australia — does not set out specific provisions for gig economy work, there has been considerable uncertainty over the status of workers in this field.

The FWO spent two years investigating whether Uber drivers and delivery riders were contractors or employees, finding in June they were contractors.

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Matthew Elmas

Matthew is the news editor at SmartCompany. You can contact him at [email protected].