Deliveroo appeal affirms emphasis on contract in determining the employment relationship

As previously noted, in the first instance, it was deemed that a Deliveroo driver was an employee and not an independent contractor. However, following the High Court rulings where there is a greater emphasis on the written contract when determining if someone is an employee or a contractor, it was expected that the initial decision in the ‘Deliveroo Case’ would be overturned.


As predicted, Deliveroo won the case on appeal as it was ruled that the driver in question was a contractor and not an employee. The reasoning for this decision will be explored as well as the possible implications.


Deliveroo Australia Pty Ltd v Diego Franco [2022] FWCFB 156


As highlighted in our blog post on the initial decision, there was reliance by the commissioner to review the totality of the relationship via a multifactorial analysis as was the precedent prior to the High Court decisions earlier this year. As a result, the Fair Work Commissioner determined that there existed an employment relationship and subsequently determined that the dismissal of Diego was ‘unfair’.

However, the High Court decisions undermined the multifactorial analysis in that it was utilised in the absence of a comprehensive contract. It was determined that the Deliveroo contract adequately highlighted the rights and obligations of Diego and Deliveroo, in which the judgment was found in favour of Deliveroo due to the recent High Court decisions. Deliveroo successfully argued that Diego was not an employee on the following grounds in accordance with the contract:

  • Deliveroo had a lack of control over the performance which Diego agreed to undertake. This was due to the notion that the food delivery was to be delivered within a ‘reasonable time’, in which Diego had the discretion as to which route to take when delivering the food. Additionally, the contract provided that if the vehicle was used to provide the service in a safe and reliable manner, it did not matter what vehicle Diego used to transport the food. Hence, it was highlighted that Diego could have used a car, e-bike, scooter, or motorbike in which Deliveroo had no control of how the work was to be carried out.

  • Diego was to provide a vehicle at his own expense, which is reminiscent of an independent contractor on the basis that the ‘personal is overshadowed by the mechanical’.

  • Diego had the right to delegate deliveries without needing to notify Deliveroo. In such instances, Diego was obliged to ensure the delegate had the necessary skills as well as paying the delegate.

  • Diego being required to pay a fee to access Deliveroo’s software and other services was not consistent with an employment relationship

Additionally, some arguments raised by Deliveroo were not deemed to be adequate in determining whether Diego was an independent contractor or an employee. These include:

  • The description that Diego was ‘a supplier in business on your own account’ did not provide a contractual right or obligation and was given minimal weight.

  • The argument that Diego was not an employee due to not being obliged to perform work for Deliveroo as well as Deliveroo being under no obligation to provide Diego with work, This observation was undermined by the Personal Contracting High Court decision, which documented that ‘the right to accept or reject work which is offered may be indicative of casual employment’

In conclusion, it was deemed that considering the recent High Court decisions, Diego was an independent contractor. As part of this, the Fair Work Commission was obliged to ignore certain factual instances in which the work was conducted in practice. It was commented that had it been required to take into consideration those additional factors, the outcome would have likely been different.


Implications

Prior to the decision of this appeal, the Federal Government made an election commitment to reform the Fair Work Act to incorporate work-like jobs, not limited to contractors in the ‘gig economy’.

Following this decision, it was raised by the Federal Minister for Jobs that there would be an overhaul of the Fair Work Act in which contractors would be entitled to some of the rights and protections offered to those who are deemed employees.


In the meantime, it is important that the employment contract explicitly details the rights and obligations of the parties involved.


Do you need assistance with determining if a relationship is a contractor or a employee relationship? Contact us at enquiries@karenansen.com