Inquiry calls for clarity on gig economy employment status, as COVID-19 exacerbates an “existing irritant” in the system

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The gig economy and platform workers will play an even bigger role in the Australian economy post-COVID-19. So work status regulations must adapt to better cater to them, according to former fair work ombudsman Natalie James.

Last week, the Victorian government unveiled its long-awaited Report of the Inquiry into the Victorian On-Demand Workforce, which was commissioned in 2018 and followed concerns about the wages and employment conditions of those working in the gig economy.

The inquiry, chaired by James, received almost 100 written submissions and included consultations with more than 200 people. It also surveyed some 14,000 people about their attitudes and habits when it comes to the gig economy.

The report makes 20 recommendations in total, identifying aspects of work-status tests that are not currently working, calling for more advice and guidance for workers, and introducing protective regulations.

Any regulatory response should balance the needs of workers and businesses, so innovation and productivity isn’t stifled, the report suggests.

However, at its heart, it calls for clarity around the status of people working in gig economy roles.

“While the fundamentals of labour market regulation have endured over more than a century, the system has not proven itself to be sufficiently agile or responsive to provide the certainty that a modern labour market demands,” James wrote in her forward to the report.

“This uncertainty undermines workers’ choice, fair competition and the integrity of the regulatory system. It also undermines the capacity of businesses to operate in clear compliance with the law and arguably permits unfair competition.”

The inherent uncertainty of the work-status test is the “root cause” of the current system’s failings, the report says.

And so, it makes a set of key recommendations to address that uncertainty, offering more choice and autonomy to those gig economy platform workers, and other ‘on-demand’ workers, who are not strictly employees.

The key recommendations are:

  • Clarify and codify work status, reducing doubt about entitlements, protections and obligations;
  • Streamline advice and support to those whose work status is ‘borderline’;
  • Fast-track resolution of work status queries;
  • Establish principles-based standards, developed through consultation, that enable fair conduct for platform workers who are not employees;
  • Improve remedies for non-employee workers to address problems in the current approach; and
  • Enhance enforcement to ensure compliance, including where sham contracting has occurred.

Grey areas

Speaking to SmartCompany, James notes that the concept of an ‘on-demand’ workforce is not a new one. And neither is the ambiguity of their employment status.

When it comes to work status, it’s not always black and white, she notes. There’s a whole lot of grey area.

“It’s always been an issue. The question is what has been the extended impact of the ambiguity,” she says.

“Because the platforms are organising large numbers of workers in a systemised way at scale, who are in this grey space, it has really shone a light on, or amplified, what has been an existing irritant in the system.”

The key here is to clarify where the line is, and make it easier, and faster, to define on which side of the line an individual falls.

For example, is a person running a genuinely autonomous small business?

“This is important … That line determines whether you’re in or out of the employment framework,” James says.

“On the one side … we have this quite close and complex regulation that is employment law.

“On the other side, if you’re a self-employed business person or you’re an independent contractor, there are almost no protections or standards there for you.

“It’s very binary, and yet it’s also very fluid and very ambiguous.”

Currently, if nothing else, it’s difficult to know which side of the line a worker falls on. That means they “bounce around the system”, and can only get a definitive answer by going through a lengthy court process.

Realistically, they don’t tend to go down the court route.

Rather, “they operate under their presumed work status indefinitely”, James says.

“They’re operating in that grey area, without the capacity to resolve it.”

Along came COVID-19

If the introduction of large-scale gig economy platforms amplified an existing issue in employment law, the COVID-19 pandemic has done the same again.

Gig economy workers were already vulnerable in the labour market, and that labour market has only grown harsher.

“The issue of uncertainty has always been a problem. Platforms coming along and organising low-leverage workers at scale has amplified the problem,” James explains.

“When you layer on top of that the pandemic and the response to it, what we have is even more hostile labour market conditions for a large number of workers.”

We know COVID-19 has had a greater economic impact on particular cohorts, James notes. Young workers and women have been disproportionately affected by job losses and hits to income.

And people on temporary visas are unable to access government support programs, including both JobKeeper and JobSeeker payments.

“You’ve got even more workers looking for any sort of income, and particularly entry-level or unskilled work,” James says. “Of course the platform economy is a great source of flexible and accessible work for these cohorts.”

However, of course, if you’re not an employee, you don’t have access to paid sick leave. That means workers are effectively incentivised to go to work when they’re sick. In a global pandemic situation, that poses a clear risk.

If a casual worker is struggling to pay the rent and put food on the table, and thinks they might be unwell but is not 100% sure, “you can understand why people would exercise these choices even though it’s not the right thing to do”.

To their credit, James notes that some of the food delivery companies operating in Australia were among the first to offer financial support to workers who tested positive to COVID-19, or who had to self-isolate.

“I presume because they recognise it was the right thing to do by their workforce, but also the community,” she says.

But, at a time when business was booming, it was likely also about reputation.

“The community needed to have trust and confidence that the people bringing them their food or driving them around were not carrying the pandemic,” she notes.

However, it does show some willing. Such platforms are leaning into the concept of supporting their workforce, “but they’re concerned about their workforce being reclassified as a result”, James says.

“They’ve been disincentivised from providing these benefits.”

The odds are stacked

As parts of Australia, and even parts of Victoria, start to emerge from the worst of the health crisis, the gig economy will have a big part to play in the economic recovery.

It’s not going anywhere, James says, so it’s time to restructure workplace laws to cater to it.

“The gig economy grew out of the last global financial crisis,” she explains.

“We see now, many consumers have been reliant on certain elements of the gig economy to access services. And for many workers, it’s a way of accessing work.

“It’s really important to continue to have these opportunities to access flexible work, in a way that suits workers.”

Currently, the lack of clarity here means the platforms hold all the power.

“The odds are all stacked in the favour of the platforms,” James says.

It’s the platforms that determine the working arrangements, and the status of the workers.

“They control the systems, that’s how they’re able to deliver such responsive and flexible services to us, and provide accessible work. But it also means it’s very one-sided.”

The question of work status is “at the heart of the problem”, she adds, and that’s what these recommendations set out to address.

“It’s really about getting the balance right, and ensuring that the flexible and accessible work is there, but also that there’s some accountability and some transparency around how that work is being organised, and redress for people when they feel the arrangements perhaps aren’t fair.”

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