GIG ECONOMY LITIGATION DATABASE
Klooger v Foodora Australia Pty Ltd (2018)
Citation/case number: [2018] FWC 6836
Country: Australia
Year: 2018
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), s 394
Factual background and procedural history
The claimant commenced working for Foodora as a delivery rider pursuant to a services contract in 2016 which stated he was an independent contractor and was to be paid a fixed hourly rate plus a fee for each delivery. Over time he was elevated to a managerial position and took on a variety of administrative functions, including creating and operating a shift substitution scheme amongst drivers/riders and creating and administering an electronic messaging chat group via the Telegram platform that enabled drivers/riders to communicate amongst themselves and with Foodora about shift selection and various other logistical matters.
Between late 2016 and early 2018, Foodora made significant reductions to the payment terms for new drivers/riders, removing the hourly rate completely and progressively reducing the rate per delivery. Although the claimant continued to be paid his contracted rate and was not directly affected by these changes, in early 2018 he made and agitated public complaints about the rates paid to new drivers/riders, with the assistance of the Transport Workers' Union (TWU).
On 22 February 2018, management of Foodora wrote to the claimant raising concerns about him potentially breaching confidentiality and intellectual property rights by maintaining and/or refusing to transfer ownership of the Telegram chat group to Foodora and requesting that he immediately leave the chat so that Foodora could become its sole administrator. After the claimant failed to comply with this request, a further email was sent on 1 March 2018 which advised that Foodora had decided to terminate the claimant's contract with immediate effect.
On 14 March 2018 the claimant made an application to the Fair Work Commission for an unfair dismissal remedy pursuant to section 394 of the Fair Work Act 2009 (Cth). Relevantly, section 382 of the Fair Work Act provides that a person is only protected from unfair dismissal (and entitled to an unfair dismissal remedy) if they are, amongst other things, an employee. In response, Foodora alleged that the Fair Work Commission did not have power to deal with the application, on the basis that Mr Klooger was not an employee but an independent contractor.
Key issues for determination
(1) Whether the claimant was an employee or an independent contractor; and (2) whether the claimant had a right to an unfair dismissal remedy.
Finding
To determine the question of whether the claimant was an employee or an independent contractor, the Commissioner adopted a multifactorial approach which involved "consideration of various factors including a number of identified indicia, with no single factor being decisive, and an overriding requirement for examination of the totality of the relationship between the [p]arties" (at [66]). Factors upon which significant weight was placed in concluding that an employment relationship was in existence included (amongst others):
- The nature of the work performed by the claimant was of a bicycle courier, with shifts arranged by an offer and selection process using an online application. Although this offer and selection process could be differentiated in practice from a system where shifts were actually allocated to named employees, the results were in effect the same: on a weekly basis, available engagements which were determined by Foodora were identified as being occupied by particular individuals. Further, the start and finish times of each shift and the particular geographical locations were fixed by Foodora (at [68]-[69]).
- Although the terms and terminology of the service contract between the claimant and Foodora clearly attempted to establish a relationship of principal and independent contractor and stipulate that an employment relationship was not in existence, it contained many provisions which were similar in form and substance to those that would ordinarily be found in an employment contract. For example, the service contract contained clauses dealing with, inter alia, rostering and acceptance of jobs, attire to be worn during the performance of services, the specific nature of the engagements to be undertaken including requirements to comply with all policies and practices of Foodora (at [70]-[72]).
- Foodora had considerable capacity to control the manner in which the claimant performed work, and it fixed the place of work and the start and finish times of each engagement or shift. This control was reflected in the metrics used in the shift selection system, which meant that in order to maintain a high ranking the claimant would be required to perform a certain number of deliveries during any particular engagement, to work a minimum number of shifts in a week, and work at particular high-demand times. As a matter of practical reality, the claimant could not pick and choose when and where to work, or how fast or slow to make deliveries (at [73]-[74]).
- Although the claimant did have the ability to perform work for other delivery companies and the relationship was non-exclusive, the performance of work for other delivery companies might be equated with circumstances where an employee might have two or more jobs (at [75]-[76]).
- The claimant did not have a separate place of work nor did he advertise his services to the world at large (at [77]).
- The claimant did not have a substantial investment in the capital equipment that he used to perform his delivery work (at [78]).
- Foodora presented the claimant to the world as representation of its business. The contract established an expectation that the claimant would dress in Foodora-branded attire and use equipment displaying the Foodora brand (at [89]-[90]).
- The claimant was remunerated on a periodic basis (at [92]).
In weighing these factors, the Commissioner ultimately concluded (at [102]) that the correct characterisation of the relationship between the claimant and Foodora was one of employee and employer. Having established that the claimant was an employee of Foodora, the Commissioner turned to consider whether he had been unfairly dismissed. It was held that the evidence established that there was no valid reason for the claimant's dismissal relating to his capacity or conduct, and the true substantive reason for his dismissal was not sound, defensible or well-founded (at [107]-[120]).
Outcome
The claimant was awarded compensation for unfair dismissal (which he elected to seek in lieu of reinstatement).
Link to decision: Klooger v Foodora Australia Pty Ltd [2018] FWC 6836
Other relevant publications
'Implications of the Landmark Klooger v Foodora Decision' (McDonald Murholme Lawyers, 2019)
