Fair Work Ombudsman determines that Uber Australia drivers are not employees in landmark ruling

Uber fringe benefits tax exemption

EMPLOYEE UBER RIDES NOW CLAIMABLE UNDER FRINGE BENEFITS TAX EXEMPTION.

Australia’s Fair Work Ombudsman (FWO) has finalised its two-year-long investigation into ride-sharing giant Uber, determining its drivers are not in an employment relationship with the business.

The FWO launched its investigation in June 2017 to determine if the engagement of Uber drivers was compliant with Commonwealth workplace laws, after it was pressed to do so by a coalition of ride-share drivers who believed the multi-billion-dollar company was flouting workplace law.

However, fair work ombudsman Sandra Parker said in a statement today the watchdog has determined the level of freedom granted to Uber drivers means they can not be classified as employees.

“The weight of evidence from our investigation establishes that the relationship between Uber Australia and the drivers is not an employment relationship,” Parker said.

“For such a relationship to exist, the courts have determined that there must be, at a minimum, an obligation for an employee to perform work when it is demanded by the employer.”

“Our investigation found that Uber Australia drivers are not subject to any formal or operational obligation to perform work.”

This ruling comes after a two-year-long investigation, with the FWO examining numerous pieces of evidence, including driver logs, ABN documents, payment statements and numerous interviews with drivers and Uber Australia employees.

“Uber Australia does not require drivers to perform work at particular times, and this was a key factor in our assessment that the commercial arrangement between the company and the drivers does not amount to an employment relationship,” Parker said.

“As a consequence, the Fair Work Ombudsman will not take compliance action in relation to this matter.”

Lawyers and workplace law experts have long presumed this case would be a bellwether for the broader gig-economy space, affecting other businesses such as Deliveroo and Bolt.

However, Parker said the investigation was related “solely” to Uber Australia and was “not an investigation of the gig economy more generally”, saying the watchdog would continue to assess other issues on a case-by-case basis.

Speaking to SmartCompany, principal lawyer at McDonald Murholme Andrew Jewell says while the FWO might be able to claim the ruling “technically” has no broader effect on the gig economy, in reality that’s not the case.

“Realistically, everyone was waiting on the decision as a decision on the gig economy,” he says.

Jewell believes other gig economy businesses will now be emboldened with their business models, and with the FWO ruling this way it could be bad news for Uber drivers in Australia.

“Uber now has the right to dictate their terms to drivers and those drivers have no protections, there is no safety net,” he says.

“While this might have prevented Uber and other operators from exploiting their drivers in the past, now what’s stopping them from pushing their rates down even further?”

In a statement, Uber Australia said it welcomed the FWO’s findings, saying their drivers value the “freedom of being their own boss”.

“We believe that being your own boss does not need to come at the expense of security and support in work. Uber believes that everyone should have access to a set of affordable and reliable social protections, whatever category of employment they are in,” a spokesperson for the company said.

“We want to work with governments and the community to ensure Australians can access independent and flexible earning opportunities, without limiting their access to the support and security they deserve.”

Uber recently raised $US8.1 billion ($116 billion) in an IPO on May 10, valuing the company at about US$70 billion. The company’s share price has had a rocky ride, however, initially plunging after its listing, but slowly regaining its footing to stay above its listing price in recent days.

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Jarrah3
Jarrah3
1 year ago

The FWO has gotten this one wrong. Some thoughts: (1) If every Uber driver stopped taking ‘requests’ it would soon become clear that the company Uber has no mechanism to supply their main product – rides on demand. Given they can’t actually operate without these drivers, it certainly still asks the question how the drivers could not be considered to be in employee-like arrangements. Nowadays there are plenty of employment scenarios that permit a great deal of flexibility in hours with many that are more focused on outcomes and deadlines rather than the minutiae of hourly schedules to gain the result. It seems like the FWO is firmly mired in the past. (2) The decision also doesn’t seem to cover the aspects of Superannuation and Workers Compensation insurance regulations that allow for an ‘extended definition of worker’ and require companies to include employee-like contractors in these programs. (3) FWO – What about Uber’s new advertising campaign where they hide the contact details of the rider from the driver and vice versa? This is not something a middleman should be allowed to do if the driver is an independent business and they are a mere facilitator. (4) On the other hand the decision is not all bad news for the drivers. All independent drivers should be handing their riders a business card for their independent ride business as soon as their Uber-originated ride is complete and the rider has stepped out at the destination. Tell these potential customers the next time they need a ride to cut out the middleman and call your business directly and you’ll give them a ride for 10% less than Uber. Any clauses in your Uber contract that prevent this should be moot as the FWO has determined Uber is not your employer and you are an independent business now!