How the gig economy impacts your business

19 June, 2018 by
Brittney Levinson

Charles Watson from HR and employment relations service Workforce Guardian sheds some light on the gig economy and how it affects hospitality businesses.

History never repeats
Many businesses in the hospitality industry are signed up to food delivery platforms such as Menulog, Deliveroo and Foodora. This digital disruption has grown enormously and only set to increase, however, with new platforms comes new problems.  Those platforms have based their business models on hiring ‘freelance’ couriers to deliver your tasty creations whereby employee entitlements don’t apply. Such assumptions are now being questioned and legally tested. As any outcomes of this testing will affect your business, we provide an overview of the current proceedings and what they could mean for your business.

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Some historical context
Back in 2001, a landmark High Court decision found a Sydney bicycle courier who knocked down a pedestrian was an employee of the courier company, not an independent contractor, in part because he wore the company’s uniform, was not providing skilled labour and could not bargain with the company over remuneration. At the time when the decision was delivered, it was felt by some that the High Court found its way to that conclusion because of the injured party and that someone’s insurance was going to cover those injuries.

Since that decision, the “gig economy” is a thing now. The term “freelancer” is now used to refer to individuals working under a range of “service providers” particularly in the food service delivery area. There has been debate on the employment status of these individuals for several years and I wonder what the High Court might think of the situation now? Well the legal proceedings and the momentum are building so it’s probably only a matter of time.

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Views on the gig economy are varied
The Transport Workers Union (TWU) has long viewed these gig economy arrangements as sham contracts. In what may serve as a crucial test as to whether the Fair Work Act applies to workers in the gig economy, the TWU has thrown its support behind unfair dismissal claims by two food delivery riders. National secretary of the TWU Tony Sheldon said that the 2001 High Court decision was the reason his union continued to push to include bicycle couriers under the Road Transport Award. The TWU continue to organise in this space and push for change at both a legislative level and taking on related cases.

Another influencer in this area, the Fair Work Ombudsman, has confirmed they are investigating Uber over pay and conditions to determine whether the engagement of Uber drivers is compliant with federal workplace laws. On the issue of delivery riders, the Ombudsman’s office has previously said these riders should fall under the Road Transport and Distribution Award, under which a casual is paid at least $24 per hour, plus weekend penalties.

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The Ombudsman’s office has also commenced action against Foodora alleging they have engaged in sham contracting arrangements that has resulted in the underpayment of workers. The Ombudsman is pushing the view that, based on a range of legal tests, Foodora breached sham contracting laws by misrepresenting to those workers they were independent contractors when they were in fact employees. The Ombudsman, Natalie James, has stated that “relevant to the decision to litigate in this case is the extent to which contracting arrangements are utilised by this significant business”.

Meanwhile, the Greens party have introduced legislation that, if it passes, would allow the Fair Work Commission to extend provisions in the Fair Work Act, awards or enterprise agreements to cover “gig workers”. According to the Greens, this will extend legal minimum pay and conditions to workers such as Uber drivers, and will deter organisations from using legal devices such as independent contractor arrangements to avoid their obligations. While the Greens aren’t likely to have the numbers to get it across the line…I think you see a pattern and next year is a full federal election.

Watch this space
The outcome of the above proceedings may affect your businesses in a variety of ways, particularly if you have invested in growth based on the use of those services.  If those colourfully clothed delivery riders become employees rather than being viewed as contractors the costs of that service will likely increase so as to cover minimum employee entitlements.

You should also consider possible exposure to any accessorial liability if those services don’t make any required changes. Accessorial liability is essentially a responsibility mechanism to encourage compliance with laws by making an involved third party who is in any way, by act or omission, directly or indirectly, knowingly concerned in or party to a contravention.  Recent prosecutions by the Ombudsman have resulted in an expanded view to include accountants, bookkeepers, clients, and franchisors being responsible for the failures of a principal to pay their employees appropriately.

Watch this space and review your terms and conditions in the meantime.