Kaseris v Rasier Pacific V.O.F

Uber has successfully argued that its business arrangements with drivers that are centred around technology based revenue sharing systems do not create an employment relationship with Uber drivers. Instead, the Fair Work Commission determined in a recent unfair dismissal case that no such employment relationship existed because Uber engaged these drivers as independent contractors.

Deputy President Gostencnik’s decision on a jurisdictional challenge by Uber to the unfair dismissal claim centred on the finding that there was no work-wages bargain between Uber and Uber drivers, identifying this bargain as the ‘minimum mutual obligation’ required for an employment relationship to exist. In reaching this decision, Deputy President Gostencnik recognised the limitations of using this criteria as these principles developed before the Gig economy and did not take into account that manner of work. As a result of applying these traditional legal principles, the Fair Work Commission rejected Mr Kaseris’s claim that he was an employee because he in fact shared more characteristics of an independent contractor than an employee.

Background

Mr Kaseris launched an unfair dismissal application against Rasier Pacific V.O.F (Uber) and claimed he was dismissed after his poor passenger rating prompted Uber to deactivate his access to the Uber driver app. In response Uber objected to the application on jurisdictional grounds by claiming Mr Kaseris was not an employee and therefore not protected by the Fair Work Act against unfair dismissal.

The decision

The Fair Work Commission ultimately determined that there was no employment relationship – in form or practice - between Mr Kaseris and Uber. In reaching this decision, Deputy President Gostencnik stated a contract of employment at its essence is ‘a work-wages bargain’, where one side is obliged to perform work that may be demanded and the other side is obliged to pay for such work. In this case there was no work-wages bargain, only a commercial business to business arrangement between the parties.

This commercial arrangement was based on Mr Kaseris providing a service fee to Uber in exchange for a lead generation service and other ancillary services such as payment and collection processing.

This decision was also based on interpreting the service agreement between Uber and Mr Kaseris. Under the service agreement Uber’s only legal obligation was to provide access to the app and remit the fares and cancellation fees that riders pay drivers. Also, the service agreement did not require Mr Kaseris to perform any work or provide any services for the benefit of Uber. The services provided by Mr Kaseris were for the benefit of riders. There was no payment for the work either. The payment from drivers to Uber was seen as a service fee, calculated as a percentage of the fare. Drivers paid Uber this fee in exchange for Uber’s commercial services; namely lead generation, payment collection and processing services and support services.

Other indicators supporting an independent contractor relationship

  • Control: Mr Kaseris had almost complete control over the way he conducted his services. Uber did have some control as they could increase the rate for charging fares as well as require the driver to comply with service standards. But because there was no real obligation to attend work and perform work, Uber’s limited control over Mr Kaseris was outweighed by Mr Kaseris’ independence.
  • Equipment: Mr Kaseris provided their own equipment. The car, smart phone and wireless plan required for the service were all sourced from the Applicant.
  • Uniform: The service agreement required drivers not to display any of Uber’s names, logos or colours in their vehicle.
  • Tax: Mr Kaseris was registered for GST and his income was not subject to PAYG tax. Uber did not deal with the ATO on behalf of drivers.
  • Wages and entitlements: The Fair Work Commission found that it could not be said that Mr Kaseris was paid a wage but rather he received a proportion of the fee charged for a trip. Mr Kaseris also did not accrue entitlements such as personal and annual leave. No super contributions were made by Uber on behalf of Mr Kaseris.

Mr Kaseris’ contended that if he was a true independent contractor he could charge a higher or lower fare without being restricted by the service agreement. The Fair Work Commission recognised this as a feature of the employment relationship but ultimately concluded it was not significant when compared to the evidence of conduct wholly consistent with being an independent contractor.

The Court also referred to the United Kingdom decision of Aslam and others v Uber B.V and Others (Aslam) where the United Kingdom employment tribunal decided an Uber driver was a worker under UK employment legislation. Although Uber’s operations in Australia and the UK are similar, the governing legislation is not. The UK’s Employment Rights Act 1996 (UK) definition of worker goes beyond Australia’s definition of employee and covers intendent contractors. The Fair Work Commission concluded the UK legislation was materially different to the Fair Work Act, confirming the decision in Aslam was of ‘no assistance’ to Mr Kaseris.

Going forward

In his judgment, Deputy President Gostencnik acknowledged the employee assessment criteria based on control may be outdated for current economic circumstances. But until the legislation is modified to respond to the realities of the gig economy, the approach adopted by the Fair Work Commission is likely to be followed by other employment tribunals. Therefore for those businesses who strictly operate only by providing technology for a service fee, they will remain protected from unfair dismissal claims. In the event the legislation changes, those businesses may need to rethink how they engage users like Mr Kaseris.

This decision has thrown a spotlight on the digital economy and workforce casualisation by highlighting how current tests for an employment relationship do not adequately take into account business structures that are centred around technology dependent revenue sharing systems.