High Court ruling applied in unfair dismissal claim by gig worker

A Deliveroo delivery driver has lost his fight to bring an unfair dismissal claim, following a ruling by the Fair Work Commission (FWC) that he was not an employee.

How did the FWC determine whether the driver was an employee?

In Diego v Deliveroo Australia Pty Ltd (2022), the FWC applied the principles set down by the High Court in Personnel Contracting and Jamsek as follows:

Characterising a relationship regulated by a wholly written, comprehensive contract, which is not a sham or otherwise ineffective, is to be determined solely by reference to the rights and obligations under that contract. It is not permissible to examine or review the performance of the contract or the course of dealings between the parties.
The subsequent conduct of the parties may be considered to ascertain the existence of variation of contractual terms.
The multifactorial approach only has relevance in the required assessment of the terms of the contract.
It is necessary to focus on those aspects of the contractual relationship that bear more directly upon whether the worker’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise. The question is whether, by the terms of the contract, the worker is contracted to work in the business or enterprise of the purported employer.
Existence of a contractual right to control the activities of the worker (including how, where and when the work is done) is a major signifier of an employment relationship.
The label or characterisation placed on the relationship by the contract is not relevant even as a “tie breaker”, or at least it is not determinative.

The FWC added to this a further proposition, namely that a contractual freedom on the part of the party performing the relevant work to accept or reject any offer of work and to work for others is not necessarily a contraindication of employment and may rather be consistent with casual employment.

FWC analysis of agreement terms

In this case, the engagement of the worker was regulated by a written agreement that comprehensively set out in whole the contractual rights and obligations of the parties.

Applying the High Court decision in Personnel Contracting, the FWC determined the question of whether the worker was an employee of Deliveroo at the time of his termination by reference to the terms of the written agreement.

The approach taken to each term is examined in the table below:

Agreement term	FWC analysis	Significance
The worker is a supplier in business on his own account.	A descriptive assertion rather than a substantive contractual right or obligation, and is therefore to be given little or no weight in the analysis.	Nil.
The worker is required to pay for tax and insurance in respect of payments made to him pursuant to the agreement, and to acquire and maintain an ABN.	Merely reflects the view asserted in the agreement that the worker is in business on his own account.	Nil.
The worker is not obliged to do any work for Deliveroo, and Deliveroo is not obliged to make any work available to the worker. The Worker may accept or reject any work offered to him when logged into the Deliveroo Rider App. The worker is free to work for any other party, including competitors of Deliveroo.	Indicative of a lack of a control over how long or when the work was performed. However, the right to accept or reject work that is offered may also be indicative of casual employment.	Significant but not determinative.
App technology used by Deliveroo and its competitors meant the worker was able to work for Deliveroo and its competitors simultaneously (by delivering meals for two or more different companies in the same vehicle during the same trip).	This is evidence concerning the actual or potential manner of performance of the agreement and cannot be taken into account.	Nil.
Up to the worker whether, when and where he logs in or provides services, and the App enables him to log in and offer to provide services at any time and in any area where Deliveroo anticipates a need for riders. Even once the worker has accepted an order, he can subsequently “unassign” himself from the order, in which case he is not obliged to perform it.	Less control than that normally associated with casual employment.	Points to contractor status.
Once an order has been picked up for delivery, it should be delivered within a reasonable time period but the worker may use any route hedetermines to be safe and efficient.	This is typical for independent contracting arrangements in the road transport industry and constitutes a performance standard rather than a right of control. The worker has the right to determine the safe and efficient route to be used to make the delivery. Clearly indicates that Deliveroo does not have a contractual right to control the mode of performance of the work.	Points to contractor status.
The worker has the right to determine what type of vehicle he uses to effect any delivery, and no particular type of vehicle is required by Deliveroo. As long as safety, reliability and legal requirements governing usage are complied with, the worker is permitted at his own discretion to use a bicycle, an e-bicycle, a motorcycle or a car to carry out any delivery.	The worker has control over the mode of performance of the work, not Deliveroo. This, combined with the inability of Deliveroo to require the worker to perform any particular delivery work, means Deliveroo has even less control under the agreement than was the case with the contracts considered in Jamsek.	Points to contractor status.
The worker must deal with others professionally when performing delivery services under the agreement, and provide the services with due care, skill and ability.	These are standards to be met in the performance of services under the agreement rather than any power conferred on Deliveroo to control the way in which services are to be performed. Performance standards of this nature are entirely consistent with an independent contracting arrangement. Agreement gives the worker discretion to determine the means by which services may be performed to the required standard.	Doesn’t point to employee status.
The worker is obliged to provide, at his expense, the vehicle by which deliveries may be effected.	Agreement allows for this to be something more than just a bicycle, and may involve substantial item of mechanical equipment such that “the personal is overshadowed by the mechanical”.	Points to contractor status.
Agreement does not require personal service on the part of the worker, and the worker has the right, without the need for prior approval from Deliveroo, to arrange for someone else to perform the services he has contracted to provide, provided the delegate has the requisite skills and training, and he pays the delegate.		Points to contractor status.
The worker is entitled to be paid a fee for each completed delivery (that is, he is paid by results, not for time worked). Worker is required to pay an administrative fee of 4% of the total fees payable to him for access to Deliveroo’s software and for Deliveroo providing invoices and other administrative services.		Points to contractor status.
Provisions concerned with safety, compliance with the law or protection against public liability.	These apply in respect of an independent contracting relationship in the road transport industry.	Neutral.
Deliveroo to use GPS technology to track the performance of deliveries, imposes in terms any right of control over worker.	Agreement states this is for the purpose of allowing customers to track the progress of their deliveries. No basis on the face of the agreement to infer that such technology may be used for the purpose of directing the worker in the performance of his work.	Neutral.

FWC ruling

The FWC concluded the worker was not an employee of the Deliveroo.

The FWC observed the Personnel Contracting decision obliged the FWC to ignore certain realities concerning way in which the working relationship between the worker and Deliveroo operated in practice. These include the fact that Deliveroo in practice exercised a significant degree of operational control over its delivery workers. These matters, taken together, would tip the balance in favour of a conclusion the worker was an employee of Deliveroo. However, as a result of Personnel Contracting, the FWC “must close [its] eyes to these matters”.

The FWC also observed this left the worker with no remedy he can obtain from the FWC for what was, plainly in its view, unfair treatment on the part of Deliveroo.

High Court ruling applied to defeat unfair dismissal claim by gig worker