Food delivery service Deliveroo has lost an unfair dismissal case at the Fair Work Commission after it was ruled that a worker was operating as an employee and not as a contractor. This case is not the first time that gig economy companies such as UberEats or Deliveroo have been in hot water after claiming that workers were employed as independent contractors, and therefore not entitled to the same rights as employees.
Deigo Franco began working for Deliveroo in 2017. As part of his engagement with Deliveroo, Mr Franco’s performance was tracked through mobile software, which logged KPI’s as set by the company. As a result of failing to meet performance benchmarks, he was sent emails with complaints about his performance. Mr Franco was not disciplined for these complaints and was eventually terminated by Deliveroo.
The issue for the Fair Work Commission was the question as to whether Mr Franco was an employee or independent contractor of Deliveroo. If found to be an independent contractor, Mr Franco would be unable to file an unfair dismissal case under the Fair Work Act. If Mr Franco was deemed as an employee, he was not only entitled to file a case against the Company, but also held employee rights which are significantly different to that of an independent contractor.
It was ruled by the Commission that Mr Franco was an employee of Deliveroo and therefore unfairly dismissed by the Company. In this ruling, it is important to understand the factors that differentiate an employee from an independent contractor. These factors include:
the level of control one party has over the other
the wording and delivery of the contract
the delegation of tasks
At first glance, it seemed that Mr Franco had control over the employment relationship, including when and where he would work. However, upon further analysis, it was determined that the system utilised by Deliveroo exerted a significant level of control including the requirement to book shifts in advance. Despite Mr Franco being able to work when he wanted, it was determined that he was directed to work certain hours at specific locations due to the nature of the performance-based software. Despite Deliveroo ceasing to use the software, it was noted that a factor in determining control was that Deliveroo could reintroduce it whenever it desired.
Whilst the contract between Deliveroo and Mr Franco was intended to be one of contractor and Principal there was not intention that there was an employment relationship. Despite this it was established through the nature of the relationship that he was indeed a deemed employee.
One factor of interest was Mr Franco could work for other companies (which he did), it was noted that this factor did not prevent the existence of an employment relationship due to the changing nature of work.
While there was an ability for Mr Franco’s work to be delegated to others akin to a contractual relationship, it was noted that casual employees are able to swap shifts when they cannot work. Hence, the issue of delegation does not prevent the existence of an employment relationship.
The Question of Unfair Dismissal
Deliveroo’s reason for Mr Franco’s termination was due to “failing to make deliveries in a reasonable time”. As it was established that Mr Franco was a Deliveroo employee, the next step was to determine whether this action warranted termination.
During Mr Franco’s employment it was established that he was not made aware of the timeframe required to make deliveries, therefore his dismissal was not reasonable. It was also noted that Mr Franco was not reprimanded for his performance at any stage of his employment.
DETERMINING THE EMPLOYMENT RELATIONSHIP
As per this case, it is important to consider factors as a whole when determining the nature of an employment relationship. Whilst there were some factors that were seen to be of a contractual nature, on the whole, an employment relationship was seen to have existed, warranting Mr Franco’s unfair dismissal.
In relation to managing Mr Franco’s performance, it is important for Companies to follow the correct processes to ensure that underperforming employees are managed effectively, and that if termination is a route that needs to be taken, that risk is mitigated and due diligence is conducted.
EFFECTIVE KPI SETTING
Lastly, it is important for Organisations to implement effective KPI’s if you are wanting to drive a high-performance culture. Deliveroo failed to do this, as setting KPI’s based on speedy delivery poses a large WHS risk and ethical concerns.
If you require support in relation to employment relationships or managing underperforming employees, reach out at firstname.lastname@example.org or give us a call on 0407 863 017.