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

Uber 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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