As the NSW state government considers its position on the regulation of the ride-sharing service Uber, it is timely to consider how certain ‘digital disrupters’ such as Uber fit within other parts of our current legal framework.
While non-traditional business models of disruptors like Airbnb and Uber are radically changing the face of the global economy and our Australian marketplace, their disruptive business models are not immune to the traditional operational challenges of workplace relations and employment laws.
One of the pillars of Uber’s success is the flexibility it offers to customers, employers and workers. This feeds the modern desire for autonomy and freedom in the way we choose to work and consume. Although successfully operated without regulation for a number of years, digital startups are increasingly subject to Australian trade, consumer and workplace law. As a recent employment law case against Uber has revealed, the very flexibility that it champions, may be its ultimate shortfall.
In the last 18 months the number of Uber drivers in Australia has gone from zero to 20,000. Uber’s unique business model relies on a network of drivers, whose only appointment requirement is to own a vehicle and pass Uber’s safety tests. The company engages its drivers as “independent contractors”, yet drivers largely consider themselves “employees”. Their dispute over the true nature of the work relationship between Uber and its drivers is central to a United States Supreme Court matter currently being heard.
In the USA, as in Australia, the age-old question of what distinguishes an “autonomous employee” from an “independent contractor” remains unsettled, with no uniform legislative definition of “employee” existing in either jurisdiction. This ambiguity has led to decades of employment law disputes in the construction, delivery, and cleaning industries. Cases are ultimately determined through a complex multi-factored test that weighs up the relevant factors which might indicate the existence or non-existence of an employment relationship.
Relevant factors include, but are not limited to; payment methods, the degree of control the employer has over the work; the provision of equipment; and the employee’s ability to work for competitors. In making a determination, there is little weight put on the opinions and perceptions of the workers and employers involved.
Interestingly, the ATO earlier this year decided that Uber drivers must register and charge for GST, which is a finding that adds more weight to a conclusion that drivers are contractors rather than employees.
In Australia, if Uber drivers are deemed “employees”, Uber will be obliged to provide the minimum National Employment Standards afforded to all employees under the Fair Work Act. This may be an extremely costly exercise – Uber may well have to back-pay substantial entitlements. If Uber has intentionally misrepresented its relationship with drivers which it knew were truly “employees”, it may also be guilty of “sham-contracting,” which carries substantial fines.
It will be interesting to follow the impact on the digital disrupters’ business model as the legislators attempt to catch up with the market place to ensure fair and uniform regulation of the industry.
Dean Frith is a lawyer and partner at Baker Love Lawyers.
