• The Fair Work Commission (FWC) has made a landmark ruling that could see a renewed push to recognising delivery riders as employees.
• The FWC ruled on Tuesday that former Deliveroo rider Diego Franco was more akin to an employee than a contractor before he was dismissed for “no valid reason”.
• Transport Workers Union (TWU) national secretary Michael Kaine said “this ruling has huge implications for gig workers in Australia and we urge the Federal Government to look at it today and to start devising regulation now.”
• Visit Business Insider Australia’s homepage for more stories.

A landmark judgement may have major repercussions in Australia, after the industrial relations tribunal found a gig worker to be an employee rather than a contractor.

The Fair Work Commission ruled in favour of former Deliveroo rider Diego Franco on Tuesday, finding that he had been unfairly dismissed last year by the company.

The case, which has been ongoing for months, centred on whether or not Franco as a delivery rider could legitimately be classed as a contractor. Gig workers for companies from Uber and DiDi to Deliveroo have been at the centre of this debate worldwide. Without defining workers as employees, companies have avoided having to grant workers a range of rights in the pursuit of profit, and have fought to maintain the contractor classification.

On Tuesday however, the Fair Work Commission recognised this ambitious legal status many thousands of workers occupy and appeared to find that they are closer to employees than contractors.

“In this case, when consideration of all the relevant indicia, has, like the colours from the artist’s palette, emerged to form a complete picture, the correct characterisation of the relationship between Mr Franco and Deliveroo is that of employee and employer. Although, the picture is impressionistic and not precise, it is nevertheless a compelling conclusion,” the Commission found.

“Mr Franco was not carrying on a trade or business of his own, or on his own behalf. Instead, he was working in Deliveroo’s business as part of that business.”

In fact, the Commission specifically ruled against arguments that have long been used by companies operating in the gig economy, including that because workers can work for competitors, they must be contractors.

In “the context of a modern, changing workplace impacted by our new digital world”, the Commission found this was insufficient justification.

Deliveroo told Business Insider Australia the company would be appealing the decision.

“We do not accept the premise upon which the decision was taken and do not believe this reflects how Deliveroo riders work with the company in practice,” a spokesperson said.

W”e are confident that riders are engaged as independent contractors. Riders have the absolute freedom to decide whether, when and where they work, and if they do go online they can decide how long to work and can freely reject any offer of work offered to them. Riders don’t need to provide personal service – they can and do use delegates to complete deliveries. Riders can and do work with multiple platforms, including competitors, at the same time – as Mr Franco did himself.”

Its reasoning though has now been wholly refuted by the FWC in a decision that was welcomed by the Transport Workers Union (TWU), which has represented the Brazilian since he filed an application 12 months ago.

“This is an important judgment and puts Australia in line with other countries across the world from the UK, to Spain and the Netherlands where the rights of gig economy workers have been recognised. This ruling has huge implications for gig workers in Australia and we urge the Federal Government to look at it today and to start devising regulation now,” TWU national secretary Michael Kaine said in a statement.

Deliveroo rider had rights

The decision means that Franco was working as an employee at the time he was booted off the app at the beginning of the pandemic, giving him claim to unfair dismissal.

The Commission found that Deliveroo had “no valid reason” for getting rid of Franco and that his dismissal was “harsh, unjust and unreasonable”. It also ruled that regardless of their legal status, Deliveroo cannot dismiss workers so flippantly.

“Irrespective of whether Mr Franco was a contractor or an employee, it was plainly unconscionable to terminate what would be well understood to be his primary source of income, without first hearing from him. The capacity to undertake a detailed analysis of Mr Franco’s performance statistics should not remove the human factor.”

Deliveroo will now be required to reinstate Franco on its app and pay lost income to him.

Kaine noted that Franco “wasn’t given a chance to argue his case and was left struggling to support his wife and baby daughter” when he was dismissed. The often vulnerable position of gig workers and their mistreatment has become an inextricable part of the gig economy debate.

“The treatment of gig workers isn’t just unfair, it is deadly. Riders work under the spectre that they may get sacked at any moment and are forced to risk their lives to make deliveries quickly,” Kaine said.

“Between September and November five delivery riders died while working. We want the Federal Government to regulate in the right way and to put in place a tribunal with full powers to regulate on gig workers’ rights and protections.”

Policy is running behind platforms

Courts and policymakers alike have been playing catch up when it comes to the gig economy, which exploded into the public consciousness with the arrival of Uber.

The emergence of dozens of ‘on-demand’ businesses, servicing everything from food and parcel delivery to transport, has made the informal sector ubiquitous. Often attracting international students, and foreign workers, a debate has raged on how they fit into existing legal work arrangements.

Last week Victoria agreed to all 20 recommendations of its own gig economy inquiry, chastising the federal government in the process for not taking action sooner. The move would see the state clarify the employment status of workers and determine minimum standards and entitlements.

At the same time, Menulog has spoken of the ‘moral imperative’ of paying workers a minimum wage, as it announces a Sydney trial to test a new model of on-demand work.

Similarly, the UK has made legal challenges of its own, forcing Uber to pay UK workers at standard rates and grant them new rights.

Tuesday’s ruling in Australia may be yet another move closer to delivering rights for workers here.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.