GIG ECONOMY LITIGATION DATABASE
Franco v Deliveroo Australia Pty Ltd (2021)
Please note that this decision has been the subject of an appeal: see Deliveroo Australia Pty Ltd v Franco [2022] FWCFB 156
Citation/case number: [2021] FWC 2818
Country: Australia
Year: 2021
Court: Fair Work Commission
Status: Determined
Topic/theme: Employment relationship
Issue: Unfair dismissal
Claimant type: Individual
Respondent type: Corporation
Legislation considered: Fair Work Act 2009 (Cth), ss 380, 382, 386, 394
Factual background and procedural history
The claimant commenced working for Deliveroo as a delivery rider on 22 April 2017, pursuant to a standard form supply agreement. Prior to commencement, the claimant attended an onboarding session at a Deliveroo premises along with other riders, at which he was provided with information about how to use the Deliveroo platform; where services could be performed; requirements in respect of safe operation of the performance of services. The claimant was also offered Deliveroo-branded clothing and related equipment in exchange for a bond to be deducted from his first four fortnightly payments, which offer he accepted.
Between 19 October 2017 and 3 February 2020, Deliveroo sent several emails to the claimant identifying aspects of his performance of delivery services it considered to be poor or inadequate and providing a warning about the potential for those matters to lead to the termination of his supply agreement. Broadly, these matters related to the claimant having marked orders which had not been received as delivered, and delays in the claimant's delivery times. In April 2020, Deliveroo undertook a review of rider accounts associated with customer complaints. That review identified the claimant as having significantly delayed delivery times, which led to a decision to terminate his supply agreement. The claimant was notified of this by email on 23 April 2020.
On 21 May 2020, the claimant applied to the Fair Work Commission for an unfair dismissal remedy pursuant to section 394 of the Fair Work Act 2009 (Cth), seeking reinstatement, continuity of service and backpay. The claimant's application was made on the basis that he was properly characterised as an employee of Deliveroo. In response, Deliveroo asserted that, having regard to the totality of the relationship, the claimant was not an employee of Deliveroo, but rather an independent contractor, and was therefore not protected from unfair dismissal. In the alternative, it was further submitted that the dismissal of the claimant was not harsh, unjust, or unreasonable. Finally, Deliveroo contended that if, contrary to its submissions, the Commissioner found that the claimant was an employee and had been unfairly dismissed, then there had been an irretrievable loss of trust and confidence in the claimant and any remedy of reinstatement would therefore be inappropriate.
Key issues for determination
(1) Was the claimant an employee of Deliveroo so as to be entitled to an unfair dismissal remedy under section 394 of the Fair Work Act?; and (2) if so, was the claimant's dismissal unfair in the sense that it was harsh, unjust or unreasonable?
Finding
The Commissioner first considered the nature of the relationship between the claimant and Deliveroo, applying a multifactorial approach which examined the following indicia:
- Control: although it appeared that the claimant had the freedom to choose when and where to work, the practical reality was that Deliveroo in fact had "significant" capacity to exercise control over the claimant's performance of work. Matters referred to in this regard included the self-service booking rider engagement system utilised by Deliveroo, which required riders to book the sessions they would work in advance and provided preferential access to particular sessions based on a rider's performance as well as incentivising riders not to cancel engagements, as well as the extensive data and metrics possessed by Deliveroo about its riders upon which control of engagement and performance of the work could be exercised (at [105]-[114]).
- Work performed for competitors: Although the claimant was permitted to (and did in fact) perform work for Deliveroo's competitors, this was not inconsistent with a relationship of employment, but instead a manifestation of the changes to traditional work arrangements brought about by changes in technology and in response to the COVID-19 pandemic. As such, this was not held to be a factor telling against the existence of an employment relationship (at [115]-[118]).
- Terms and terminology of the supply agreement: Although the terms and terminology of the supply agreement clearly attempted to establish a relationship of principal and independent contractor, those terms were determined unilaterally by Deliveroo without any capacity for the claimant to negotiate. As such, the terminology in the agreement needed to be treated with a level of caution. Further, the agreement contained some provisions which were similar in form and substance to those that would ordinarily be found in an employment contract, including a requirement to act professionally and provide services with due care, skill and ability, and a requirement to comply with all applicable work-related health and safety legislation (at [119]-[123]).
- Provision of equipment: Although the fact that the claimant provided his own equipment, including a smartphone and motorcycle, may ordinarily weigh against a finding of an employment relationship, this equipment would have been required by the claimant for his own personal use in any event. As such, it could not be said that the claimant had a substantial investment or capital outlay in this equipment. Further, it could not be said that a high degree of skill or training was required to use either item of equipment (at [124]-[125]).
- Personal service: The Commissioner accepted that the fact the claimant was permitted to delegate or subcontract the performance of his role if certain conditions were met was contrary to the usual features of an employment relationship. However, there was no evidence that the claimant had ever delegated his work, and there would be clear financial constraints involved in any subcontracting arrangement as the remuneration paid by Deliveroo would be unlikely to cover payment of the national minimum wage to any delegate. Further, it was noted that arrangements involving shift or job swaps are frequently encountered in the context of an employment relationship (at [126]-[128]).
- Presentation as part of the business: Although the claimant was not compelled to do so, Deliveroo expected that he dress in Deliveroo-branded clothing and utilise Deliveroo-branded equipment. As such, he was clearly encouraged to present himself as part of Deliveroo's business, which indicated a relationship of employment (at [129]).
- Mode of remuneration and taxation: The claimant was paid an amount per delivery, with payment made based on data gathered by the Deliveroo app and invoices produced by Deliveroo. Income tax was not deducted from this amount, and this along with any costs relating to his work were the responsibility of the claimant. While this would ordinarily be indicative of a relationship of independent contractor, in this case the Commissioner suggested it was simply a reflection of the arrangement established under the supply agreement (at [130]-[131]).
- Paid leave: The claimant was not provided with any paid leave entitlements in relation to his work for Deliveroo (at [132]).
- Distinct profession or trade: The work performed by the claimant did not involve an established profession, trade or distinct calling. This would tend to suggest a relationship of employment, however was not determinative of such (at [133]).
- Entrepreneurial business with goodwill: Contrary to submissions made by Deliveroo, there was no evidence that the claimant in any way sought to distinguish himself from his presentation to the world as a Deliveroo food delivery rider. Further, the evidence established that there was no prospect for the claimant to have developed any goodwill or tangible value from the work that he was conducting as a food delivery rider (at [134]).
After weighing up these indicia, the Commissioner found that the relationship between Deliveroo and the claimant was one of employment. In this regard, particular emphasis was placed on the level of control that Deliveroo possessed, and which it could choose to implement or withdraw, in relation to the claimant's performance of work and the realities of a modern, changing workplace impacted by the new digital world (at [138]-[139]).
The Commissioner then went on to consider whether the claimant's dismissal was harsh, unjust or unreasonable. After reviewing the surrounding circumstances (at [140]-[156]), the Commissioner held that the claimant's termination was without valid reason involving established misconduct or capacity inadequacy, and involved an unjust and unreasonable process which included the complete absence of any opportunity for the claimant to be heard before the decision to dismiss was made. As such, the Commissioner concluded that the claimant's dismissal was harsh, unjust and unreasonable so as to entitle him to an unfair dismissal remedy under section 394 of the Fair Work Act (at [157]-[160]).
In respect of the remedy to be granted, the Commissioner found that reinstatement would be appropriate. He observed that the remote and online nature of the working relationship between Deliveroo and its riders supported the conclusion that there had not been a genuine loss of trust and confidence such that the employment relationship could not be successfully and harmoniously re-established (at [161]-[166]).
Outcome
The Commissioner held that the claimant was an employee of Deliveroo, and that he was dismissed unfairly. As such, orders were made for reinstatement, continuity of service and backpay pursuant to section 394 of the Fair Work Act.
