Uber drivers not ‘traditional’ employees, Fair Work Ombudsman rules, to union fury

A ruling that Uber drivers employees because they’re not obliged to work has been slammed.

Uber maintains its tens of thousands “driver-partners” across Australia choose to drive using the Uber app “because they like to set their own schedule and be their own boss’. Picture: Oliver Berg/AFP

Workplace law experts and unions have slammed the Fair Work Ombudsman’s ruling that Uber Australia drivers are not employees and therefore not entitled to minimum wages and conditions.

Fair Work Ombudsman Sandra Parker announced today that a two-year probe by the regulator had found Uber Australia’s relationship with tens of thousands of drivers was not an employment relationship.

The finding, welcomed by Uber Australia, contrasts with a United Kingdom ruling that Uber drivers were employees. Uber is appealing the UK decision.

Ms Parker said the fact that Uber Australia did not require drivers to perform work at particular times was a key reason for finding there was no employment relationship.

“For such a relationship to exist, the courts have determined that there must be, at a minimum, an obligation for an employee to perform work when it is demanded by the employer,’’ she said.

“Our investigation found that Uber Australia drivers are not subject to any formal or operational obligation to perform work. Uber Australia drivers have control over whether, when, and for how long they perform work, on any given day or on any given week.”

But University of Adelaide law professor Andrew Stewart said the FWO decision was very disappointing given the significant uncertainty that existed over the legality of Uber’s arrangements.

“Should have been tested in court”

“The central issue is not just whether there must be a pre-existing obligation to work, but whether that obligation can arise in a practical sense from the way Uber structures its operations,’’ he said.

“That is a matter that could and arguably should have been tested in court, not behind closed doors. As it is, Uber remains vulnerable to claims from drivers and/or unions. But it will rightly feel that the regulator has endorsed its business model.”

The FWO probe followed sustained campaigning from ride-sharing associations which said Uber was incorrectly classifying drivers by treating them as contractors rather than employees, stripping them of their rights and resulting in underpayment.

RideShare Drivers United argued Uber was operating “in sharp contradiction to Australian workplace laws” by classifying drivers as contractors without allowing them to negotiate or have a say over pricing or other business decisions which “real subcontractors are able to make”, accusing them of sham contracting.

Uber has long maintained its tens of thousands “driver-partners” across Australia choose to drive using the Uber app “because they like to set their own schedule and be their own boss”.

Jim Stanford, director of the Centre for Future Work, said the FWO decision created an enormous loophole that would threaten labour standards in many other occupations.

“Any employer can tell their workers they are free to clock out and go home any time they want,’’ he said.

“Should that win them the right to ignore minimum wage laws and other basic standards?

“There are in fact many occupations where workers can choose to sign up for shifts, so this is not a hypothetical question. For the Ombudsman to conclude that this single dimension of supposed autonomy invalidates all labour protections is outrageous”.

Drivers “absolutely under the thumb”

He said the decision “badly misreads the real relationships of power and control that are characteristic of gig jobs”.

“Yes, in most cases workers can choose when to clock on with the app,’’ he said.

“Yet they nevertheless work when they are needed by the company (particularly in peak times), because those are the only times they have some chance of decent earnings. And workers can be downgraded by the app if they don’t accept jobs when they are offered, thus further undermining their future incomes.

He said workers operates “absolutely under the thumb” of Uber in every other dimension of their work.

“The company sets both the service price and the share that the driver keeps, and can change those parameters unilaterally,’’ he said.

“The company instructs who the driver picks up, and the route they should follow. The company controls all money flows. The company sets standards and practices, and can fire the drivers at any time — often on the basis of ratings collected by an algorithm.

“These workers are not independent at all. They operate under the thumb of an intense, unforgiving, digitised boss. And now the Fair Work Ombudsman has given this lopsided arrangement its seal of approval, pretending that it somehow constitutes independent trading between equal parties.”

An Uber spokeswoman said “driver-partners tell us they value the freedom of being their own boss”.

“They choose if, when and where they drive. In fact, more than 90 per cent of driver-partners in Australia tell us flexibility is the key attraction to using the Uber app,’’ she said. “We welcome the fact that the Ombudsman’s findings recognises this.”

Transport Workers Union national secretary Michael Kane said the FWO decision was devastating for workers in the gig economy.

“Last year we had a landmark victory when a Foodora rider won an unfair dismissal case and we know the same control factors are in play for workers in Uber and right across the gig economy,’’ he said.

“If this is what our laws are guiding regulators to do then these laws are hopelessly broken and the Government must act urgently to put in place rights that protect all workers.

“In jurisdictions around the world from London to New York and Los Angeles, Uber is being held to account and faced down despite its massive lobbying efforts and bullying. Yet in Australia today it has been given the green light to continue ripping riders and drivers off, sacking them without warning or the right to appeal and ignoring their pleas to be able to earn a decent living,”