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Nick Duggal - Impact of Fair Work Ombudsman Ruling on Uber

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The Fair Work Ombudsman said it had "commenced an investigation into Uber, with the purpose of determining whether the engagement of Uber drivers is compliant with Commonwealth workplace laws". The scope of the investigation into Uber is one of the most far reaching that Uber has been subject to worldwide, and has the potential dramatically impact not only Uber, but also the gig economy and contingent labour market generally.

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Nick Duggal - Impact of Fair Work Ombudsman Ruling on Uber

  1. 1. Sydney ▲ Melbourne ▲ Brisbane ▲ Canberra ▲ Newcastle ▲ Perth Impact of the Fair Work Ombudsman Ruling on Uber Nick Duggal Partner
  2. 2. Overview Scope of the investigation Organisations and gig economy vulnerability Pirot Pty Ltd v Return to Work SA (Schultz) [2017] SAET 92 Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 Senate Inquiry: ‘Corporate Avoidance of the Fair Work Act’ Uber and the gig economy in the UK Impact of ruling
  3. 3. Fair Work Ombudsman Investigation ▲ The Fair Work Ombudsman said it has “commenced an investigation into Uber, the purpose of determining whether the engagement of Uber drivers is complaint with Commonwealth workplace laws” ▲ Investigation was lobbied for by Rideshare Drivers United (RSDU) ▲ Scope of the investigation into Uber is one of the most far reaching that Uber has been subject to worldwide ▲ Potential to dramatically impact not only Uber, but also the gig economy and contingent labour market generally
  4. 4. Organisation and gig economy vulnerability ▲ Organisations and gig economy are in a vulnerable position ▲ Ruling in Pirot Pty Ltd v Return to Work SA (Schultz) [2017] SAET 92 ▲ Uber only one step removed from a relationship with the driver in this case ▲ Increases the spot light on Uber and the gig economy generally ▲ We can expect such relationships to be scheduled for regulatory review more frequently
  5. 5. Pirot Pty Ltd v Return to Work SA (Schultz) [2017] SAET 92 ▲ Driver, Schultz performed chauffeur work (including through Uber, in addition to private Blue Ribbon trips) using a car he leased from Blue Ribbon ▲ Schultz was as found by the Tribunal’s Deputy President Steven Dolphin, to be an employee of Blue Ribbon and not a subcontractor as alleged by Blue Ribbon because he had operated under the “obedient milieu’ as instructed by Blue Ribbon, including: ▲ Directing which vehicle he should drive, where to pick up and drop off clients; ▲ Booking jobs for him through its systems or Uber; ▲ Requiring him to wear a uniform and name badge; ▲ Completing worksheets to record his jobs at the end of each work day; ▲ Retaining 50% of the income eared from each Uber job he picked up; ▲ Requiring him to pay a shift fee to cover the comprehensive car insurance and the Uber phone each time the vehicle was leased.
  6. 6. Pirot Pty Ltd v Return to Work SA (Schultz) [2017] SAET 92 ▲ The Tribunal’s Deputy President Steven Dolphin, set out the following indicia as held in Hollis v Vabu (2001) 207 CLR 21 and Stevens v Brodribb Sawmilling Co. Pty Ltd (1986) 160 CLR 16 to be examined in order to determine if there is a contract of service: ▲ The parties’ intention as to the type of relationship they want to have; ▲ The exercise of control over the work and the manner in which the work is performed; ▲ Whether work is undertaken for others as opposed to exclusively or primarily for the putative employer; ▲ Hours worked – minimum/set hours or flexibility; ▲ Supply of tools and equipment; ▲ Whether work is performed from a particular business premise; ▲ Advertising and promotion of services; ▲ Ability to delegate work to employees and subcontractors; ▲ Rights to terminate the relationship; ▲ Reimbursement for work-related expenses; ▲ Representation to the public as part of the putative employer's business; ▲ Entitlements such as annual leave, sick leave, long service leave and superannuation; ▲ Payment arrangements; ▲ Do they invoice or receive a salary, how is tax paid; ▲ Do the economic activities of the putative business involve the taking of risk in the pursuit of profits?; ▲ Does the putative business engage in a repetitive and continue manner with the purchases of its services?; ▲ Does the putative business employ or engage persons other than the owner/operate to carry out its economic activities?; ▲ Is goodwill being created by the economic activities of the putative business? Is the putative business promoted as a business?; ▲ Does the putative business have tangible assets such as buildings and equipment which are utilised to support its economic activities?; ▲ Does the putative business have the basic transactional systems that are common of a business of that kind?; ▲ Do the services provided by the putative business involve the provision of labour of sufficient skill to be suggestive of the pursuance of a profession or trade through a business?; ▲ Are the regulatory requirements of a business being met by the putative business?
  7. 7. Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 ▲ Passed Senate 5 September 2017 ▲ Labor succeeded in securing inclusion of amendments to enable the Fair Work Ombudsman to exercise coercive powers to gather evidence of breaches
  8. 8. Senate Inquiry: ‘Corporate Avoidance of the Fair Work Act’ ▲ Report published 6 September 2017 ▲ 11-month inquiry ▲ 29 recommendations for government made
  9. 9. Senate Inquiry: ‘Corporate Avoidance of the Fair Work Act’ The Gig Economy ▲ “Gig economies have not invented a new way of working – they have exploited ‘a cloak of innovation and progress to reintroduce archaic and outdated labour practices’” ▲ “just a more discrete and sanitised way for companies to abrogate their obligations by requiring workers to be contractors” ▲ “nothing incompatible between flexible working and being an employee”
  10. 10. Senate Inquiry: ‘Corporate Avoidance of the Fair Work Act’ Recommendations for government include: ▲ Sham contracting ▲ Finding: Section 357 of the Act enables employers to avoid penalty for mischaracterising employment relationships if they prove they “did not know and were not reckless as to the representation” ▲ Recommendation: make sham contracting a strict liability offence ▲ Finding: the burden of proof in a dispute “effectively rests with the employee” ▲ Recommendation: reverse the onus ▲ Gig economy ▲ Finding: Gig economy contracts and platforms providing below-award rates ▲ Recommendation: amend the Act to protect dependent and on-demand contractors, and capture workers who are engaged through a labour hire or a work allocation platform; ▲ Recommendation: require platform providers to verify that users comply with minimum standards, and provide minimum labour guidelines for different categories of work; ▲ Recommendation: work with states and territories to ensure gig companies are responsible for workers’ health and safety
  11. 11. UK Courts ▲ In the UK courts have found against Uber, City Sprint, Excel and eCourier regarding their treatment of their Contingent Workforces ▲ Appeal on Uber ruling to be heard from 27 September 2017 ▲ Most recently, minicab firm Addison Lee has lost in court over it’s treatment of workers as ‘independent contractors’ ▲ Judge Joanna Wade criticised the use of contradictory language in the contract which was intended to avoid the courier being treated as an employee
  12. 12. UK Law Review ▲ In July 2017, a UK Review of working practices commissioned by the Prime Minister was published: ‘Good Work: The Taylor Review of Modern Working Practices’ ▲ In assessing the current state of the UK law the review recommended: ▲ The current legal framework needs to adapt to reflect emerging business models, with greater clarity for individuals and employers; ▲ The focus should be clarifying the line between ‘worker’ status and self-employment as this is where there is greatest risk of vulnerability and exploitation; ▲ Further efforts should be made to remove incentives for some businesses to gain competitive advantage by adopting business models which may particularly disadvantage workers; ▲ The aim of a new legislative framework is that the legislation does more of the work and the courts less.
  13. 13. Fair Work Ombudsman Ruling: Potential for dramatic impact on Uber as well as the gig economy and contingent labour market generally ▲ Liability to pay employee entitlements to all workers, such as sick leave, annual leave and minimum wage. ▲ Additional administration costs if required to process GST payments etc ▲ Flow on effect to other gig economy players
  14. 14. Advice to organisations and gig economy platforms ▲ Most commentators have expressed the view that workers such as Schultz are likely to be found to be employees ▲ Assess now to ensure workers are appropriately characterised or risk getting caught up in a legal system that is trying to catch up with the fast-growing gig economy ▲ Other steps might include: ▲ Accumulating evidence of your review ▲ Defraying risk by using third party suppliers ▲ Ensuring rates leave workers no worse off overall ▲ Carefully drafted terms with suppliers and workers
  15. 15. Nick Duggal @nicholasduggal 0421 348 596 (03) 8399 6193 NDuggal@moray.com.au

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