Ridesharing companies offer an alternative, and often cheaper, means of transport to passengers. There is wide public demand for alternative forms of transport in many Australian cities. This demand needs to be met with regulatory means to ensure the fees paid by passengers are regulated, that the service is appropriately taxed, and to ensure the safety of passengers, ridesharing drivers and other drivers on the road.

On 30 October 2015 the ACT became the first Australian jurisdiction to legalise ridesharing when the Legislative Assembly introduced the Road Transport (Public Passenger Services) (Taxi Industry Innovation) Amendment Bill 2015 (No 2) (Amendment Bill).  This Bill was passed by the Legislative Assembly on 17 November 2015.

The ACT amendments provide one solution for the regulation of ridesharing services. However, there are still many gaps in the regulatory space that will need to be addressed if ridesharing is to operate successfully in the ACT.

Uber Australia (Uber) is perhaps the most well known and most hotly disputed ridesharing company and its UberX ridesharing service provides a model example for the regulatory issues that remain in the ACT and other Australian jurisdictions.

What has the ACT achieved?

The ACT has successfully regulated Uber and other ridesharing companies in a way that allows them to operate within existing schemes regulating taxis and other forms of public transport, and in a way that promotes public safety. The ACT scheme is currently running on an interim phase, which allows authorised ridesharing services to operate subject to certain limitations.

The Road Transport (Public Passenger Services) Regulation 2002 (Regulation) was amended on 30 October 2015 to incorporate provisions for interim rideshare booking services and ridesharing arrangements under Chapter 4A.  However, the Amendment Bill has not yet been formally incorporated into the Road Transport (Public Passenger Services) Act 2002 at this stage.

The Amendment Bill provides for the accreditation of operators of transport booking services, such as Uber, and provides for the licensing of vehicles used as rideshare vehicles.  The effect of the Regulation of the Amendment Bill is to bring ridesharing services under the management of the ACT road transport authority.

The amended legislation enforces regulation of ridesharing by introducing strict liability offences for transport booking services and rideshare operators. For example, s 32 of the Amendment Bill provides that it is an offence to operate a transport booking service without accreditation. Rideshare drivers are also subject to strict liability offences under s 36A if they pretend to be an affiliated driver, or under 36F if they are not affiliated with a transport booking service.

The ACT scheme promotes public safety by requiring that all drivers are subject to background checks and are appropriately licensed, and removing anonymity of both drivers and passengers. For example, 164F of the Regulation provides that:

  • an agreement between the ACT and a rideshare booking service must include provisions including that each affiliated driver holds a full driver licence, has not been disqualified from holding a license and satisfies suitability criteria
  • rideshare vehicles must be registered, comply with applicable vehicle standards, and must receive a rideshare vehicle suitability certificate
  • rideshare booking operators must record the name and driver licence number of the driver, registration number of the rideshare vehicle, name or passenger number of the passenger, location of where each passenger was picked up and dropped off and the fare paid for each rideshare, and provide these details on request to the road transport authority, a police officer or a member of an emergency service.

However, the amended ACT laws have significant gaps that will need to be addressed in the future, particularly as other Australian jurisdictions begin to consider how to regulate ridesharing under their respective laws.

What regulatory issues remain?

Uber runs on a unique business model that creates ambiguity over how it should be defined as a company, which serves to make regulation of this company particularly challenging. These issues need to be considered now while Australia is in the early stages of implementing ridesharing. Even if Uber is ultimately unsuccessful in Australia, ridesharing will remain in demand and Uber’s ridesharing model and technologies are likely to survive and be copied by others.

Taxation law

The ACT amendments may have added to the debate on whether Uber can be defined as a taxi service, a definition that Uber categorically denies.  Although 164C of the Regulation provides that a rideshare service does not include a taxi service, the definition of a transport booking service under s 28 of the Amendment Bill includes both rideshare services and taxi services. The implication of regulating ridesharing under taxi regulatory schemes is that Uber and other ridesharing companies are seen as providing a service, which may have consequences under Australian taxation law.

Earlier this year, the Australian Taxation Office (ATO) made a determination that UberX drivers are providing taxi services and therefore must have an ABN and start paying  Goods and Services Tax (GST) from the first dollar that drivers earn. However, if Uber is not a taxi service, drivers would only need to register to pay GST after earning $75,000. Significantly, the obligation to pay GST falls on UberX drivers rather than Uber itself. As drivers already pay a commission to Uber, and pay for maintenance of their own vehicles, paying GST may become prohibitive and might start to detract drivers from entering into the ridesharing scheme.

In response to the ATO’s requirement that Uber drivers will need to start paying GST, Uber has launched an application against the ATO in the Federal Court of Australia in NSW. The issue of whether Uber can be described as a taxi service, and if so whether its drivers must pay GST, is next before the Court in February 2016.

Labour law

The ACT amendments have not made the dispute about the status of Uber drivers any more clear. Uber drivers are described by the company as ‘driver-partners’. Although Uber requires drivers to pay commission for each ride, drivers are independent and in control of when they are available online to provide a ride. Uber itself acts as a third party, and merely facilitates contact between its drivers and passengers. The issue is whether drivers are correctly described as independent contractors or employees. As independent contractors do not have the same rights as employees, such as workers compensation and dispute arbitration, the answer to this debate will have consequences under labour law.

In the ACT, the Explanatory Statement to the Amendment Bill  foreshadows the introduction of workers’ compensation and dispute resolution for transport booking service drivers. The Amendment Bill itself amends s 11(2) of the ACT Workers’ Compensation Act 1951 (ACT) to include that an individual is taken to be an employed worker if the engagement of the individual is under a contract, even if the engagement has not been on a regular or systematic basis. However, nothing else has yet been done in this space, which potentially leaves rideshare drivers at risk should they become sick or injured as a result of work.

Regulation 164F requires rideshare booking services to ensure there is a third-party property insurance policy of at least $5,000,000 in force for each rideshare vehicle. However, many insurance companies refuse to cover claims if the individual was driving a vehicle for profit.  Uber’s Australian insurance policy is currently unpublished, but on its website Uber claims that its driver-partners will be covered by ‘up to US $5,000,000’ for bodily injury and property damage to third parties.  However, Uber drivers are left unprotected and are at risk of covering  the cost of their own injuries or vehicle damage.

Additional concerns

If Uber drivers are seen to be providing a taxi service, a potential consequence is that drivers could owe certain guarantees to consumers under Australian Consumer Law. This would include a guarantee to carry out services with due care and skill. This could potentially operate to make Uber drivers vulnerable to claims in negligence or other claims such as failing to meet Australian service standards.

What needs to be done?

Despite its uncertain legal status, UberX cars have been accepting passengers for some time in NSW, Victoria, Queensland, Western Australia and South Australia. The governments in these jurisdictions have been cracking down on UberX drivers by imposing fines and suspending licences for providing unlicensed and non-accredited transport services.

  • The NSW, Victorian and South Australian governments are currently reviewing ridesharing and other alternative forms of transport.
  • Although UberX has not launched in the Northern Territory, the government is currently in negotiations with Uber and is conducting a review around whether ridesharing services can be regulated alongside taxi services. Similarly, the Tasmanian government has indicated that it will be legalising and regulating ridesharing, and will be introducing legislation to do so.
  • However, Queensland and Western Australia continue to oppose ridesharing, and are operating schemes to track and fine UberX drivers.

The ACT reforms show that Uber and other ridesharing services can operate and be regulated in a way that protects public safety. However, there are significant concerns for the rights and obligations of UberX drivers, who are left at risk of prohibitive tax obligations and are unprotected in the event of sickness or injury as a result of work. The matter currently before the Federal Court will address the ultimate issue of whether Uber is a taxi service, which will potentially lead to amendments in terms of ridesharing drivers’ rights. The gaps that remain to be addressed under labour and taxation law are ultimately federal issues that will need to be addressed as ridesharing continues to operate in the ACT and as other jurisdictions consider legislation to legalise and regulate it.