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The Fair Work Commission Full Bench (FWCFB) has quashed a finding that a rider of Deliveroo, Mr Franco, was an employee rather than an independent contractor. Therefore, Mr Franco is not protected from unfair dismissal.

This decision comes after the High Court affirmed earlier this year in Personnel Contracting[1] and Jamsek[2] the primacy of contractual terms, where the parties had taken the time to commit the agreement to writing (and there was no suggestion of a variation to the contract or a sham).

At first instance, in May 2021, Deliveroo raised a jurisdictional objection to Mr Franco’s unfair dismissal application asserting that he was not an employee of Deliveroo at the time of the termination of his engagement. Rather, he was an independent contractor providing services to Deliveroo.

At first instance, the Commissioner’s consideration of the nature of the relationship between Mr Franco and Deliveroo included an analysis of the multifactorial test across the totality of the relationship. After weighing up the indicia considered as part of the multifactorial approach, the Commissioner found that the relationship between Deliveroo and Mr Franco was one of employment, mainly because the level of control that Deliveroo possessed, and which it could choose to implement or withdraw. In addition, the fact that Mr Franco could (and did) work for competitors of Deliveroo, should be assessed in the context of a modern, changing workplace impacted by the new digital world and the gig economy.

However, following the High Court’s reasoning earlier this year, the FWCFB stated that four aspects of the 2019 Agreement (which applied at the time of the termination of Mr Franco’s engagement), weighed decisively in favour of the conclusion that Mr Franco was an independent contractor.

The four aspects were:

  • the contract indicated a lack of control of Deliveroo over the manner of performance of the work;
  • Mr Franco was obliged, at his expense, to provide the vehicle to make deliveries;
  • Mr Franco could, without the need for prior approval from Deliveroo, arrange for someone else to perform the services; and
  • Mr Franco was required to pay an administrative fee of the total fees payable to him for access to Deliveroo’s software and for Deliveroo providing invoices and other administrative services.

The FWCFB stated that in accordance with the recent High Court decisions, in determining the nature of the relationship, they should analyse the terms of the 2019 Agreement only and ignore certain realities concerning the way in which the working relationship between Mr Franco and Deliveroo operated in practice. Noting that, had it been permitted to take into account other matters, as the Commissioner did at first instance, the FWCFB would have reached a different conclusion.

Key takeaways

  1. Review your independent contractor agreements to make sure they reflect the relationship of principal and independent contractor and contain the key contractual rights and obligations identified by the High Court.
  2. Review your current written agreement/s with independent contractors to ensure they do not have terms characteristic of an employment relationship.
  3. Take steps to ensure there is a written contractor agreement at the start of the relationship.

You can access the full decision here.

[1] Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1

[2] ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2

If you would like to discuss this further and the implications for your business, please contact our Employment + Workplace Relations Partner, Erin Lynch or Lawyer, Rocío Jamardo Paradela.

The contents of this publication do not constitute legal advice and are for general information purposes only. You should seek legal advice regarding your particular circumstances.