Could UK's landmark gig economy deal happen in Australia?

Out-Law Analysis | 07 Mar 2019 | 11:24 am | 3 min. read

ANALYSIS: News that gig economy drivers engaged by a UK courier company struck an unprecedented deal granting them holiday pay and guaranteed earnings provides little comfort to Australian workers, as the legal framework here is very different.

However, recent government inquiries and an interesting Fair Work Commission decision indicate that the gig economy will continue to be a hot topic in Australian employment law in 2019 and beyond.

Last month, UK trade union GMB and courier company Hermes agreed an unprecedented collective agreement deal which offers holiday pay and guaranteed earnings to self-employed workers.

The 'self-employed plus' agreement was struck following a victory for GMB against Hermes in the Leeds Employment Tribunal last year. The tribunal found that a group of 65 couriers were 'workers' entitled to basic rights and not contractors, as argued by Hermes.

The agreement, which is opt-in, gives couriers working for Hermes individually negotiated pay rates allowing them to earn at least £8.55 per hour, plus holiday pay for up to 28 days a year on a pro-rata basis.

Could 'self-employed plus' happen in Australia?

The legislative regimes in Australia and the UK are different, so it is unlikely that a similar deal could happen here.

In Australia, there is no equivalent to the distinction between an 'employee' and a 'worker' in UK law. Here, you are either an employee or an independent contractor. If you are an employee, your statutory entitlements will include unfair dismissal protection, statutory redundancy pay and time off for emergencies. There is no intermediate category equivalent to worker, and no intermediate set of entitlements.

As such, while the Court of Appeal in England and Wales recently upheld a ruling that a group of Uber drivers were workers, and therefore entitled to a minimum wage and paid holidays, Australia's Fair Work Commission found in two recent cases that Uber drivers bringing unfair dismissal claims were not employees and were therefore not protected from unfair dismissal (see: Pallage v Rasier Pacific Pty Ltd [2018] FWC 2579; Kaseris v Rasier Pacific VOF [2017] FWC 6610). Ultimately, this means that Australian employers are less likely to be compelled to 'come to the table', as Hermes was following the employment tribunal's decision.

In Australia, unlike in the UK, sham contracting is expressly prohibited under the Fair Work Act, and the sham contracting provisions are civil remedy provisions. Employers which are found to be in breach can be subjected to fines and face significant risk to reputation and exposure to back pay. Australian organisations may therefore be reluctant to enter into a Hermes-style deal, for fear that it may be taken as an admission of sham contracting and may expose them to significant additional liability.

Finally, the stakes are arguably higher in Australia. In the UK, even if an employer concedes all its employees are workers, that will not open the door to statutory entitlements such as unfair dismissal protection and redundancy payments. Not so in Australia. Depending on the particular arrangements and payment models of a gig economy employer, disputes on employment status in Australia can easily become significant "bet the company"-style litigation.

What does the future hold for the gig economy in Australia?

A Hermes-style deal may be unlikely in Australia. However, employment status and the gig economy continues to be a hot topic.

The most obvious example of the volatility surrounding the gig economy is the highly-publicised Fair Work Commission decision against food delivery company Foodora in November 2018. Unlike in the Uber decisions referenced above, the Fair Work Commission found that the worker in this case had been an employee rather than an independent contractor, and therefore entitled to bring an unfair dismissal claim. Additional litigation on the issue pending legislative reform seems inevitable.

The Victorian Government recently announced Australia's first inquiry into the gig economy, and claims of workers being underpaid and poorly treated. While the inquiry is not expected to deliver a final report until late 2019, Deliveroo has already publicly released its own submissions to the inquiry. The company has proposed a variety of reforms, including allowing "workers to accrue benefits on the basis of ... the number of deliveries completed or the value of fees earned, rather than their ordinary hours of work".

At federal level, the Labor party has committed ahead of the 2019 election to restore a system of minimum pay and conditions for the transport industry, which would likely extend to gig economy companies such as Uber. Labor has also flagged its intentions more generally to introduce increased protections for gig economy workers, although the details of such arrangements are not yet clear.

Katie Williams is an employment law expert at Pinsent Masons, the law firm behind