In April 2020, former Deliveroo driver Franco claimed unfair dismissal after being let go for delayed delivery times.  At first, the Commissioner found that Deliveroo driver Franco was an employee and therefore was unfairly dismissed, this meant that Deliveroo driver Franco would be reinstated and back paid. However,  in August 2022, Deliveroo appealed the Commissioner’s decision to the full bench (the full bench refers to all the judges of the court). The Full Bench decided that due to the supplier agreement that Deliveroo driver Franco signed, it was found that he was, in fact, a contractor and not an employee.

The elements in the supplier agreement that demonstrated this were:

• Deliveroo had a lack of control over how Deliveroo driver Franco performed his deliveries.
• Deliveroo could not require Deliveroo driver Franco to perform any particular deliveries
• Deliveroo driver Franco had to provide his own transport to make the deliveries
• Deliveroo driver Franco could have someone else do the deliveries without Deliveroo’s permission
• Deliveroo driver Franco had to pay a fee to be able to access the delivery software.

The cause of the change in the decision?

On appeal, Vice President Hatcher, Vice President Catanzariti and Deputy President Cross (the full bench)found that in light of the recent case, Personnel Contracting and Jamsek, Commissioner Cambridge’s original 2021 decision no longer reflected the current state of the law.

In Personnel Contracting and Jamsek, the High Court found that the reality of a working relationship should not be taken into account where a comprehensive written contract exists unless that contract is a sham or otherwise ineffective. A sham contracting arrangement is when an employer attempts to disguise an employment relationship as a contract or relationship. Penalties for Sham contracts range from $13, 320 for individuals and $66, 000 for corporations, per contravention.

Takeaway notes

1. A well-constructed letter of engagement/contractor agreement will save you in the long run. It is critical to very clearly set out the terms on conditions of employment and have both parties agree and sign the document, remember, these terms and conditions are legally binding.
2. It is not simply enough to call someone an employee or a contractor, it is important to ensure that the relationship demonstrates how the parties interact. If they are an employee, they should have tools, machinery and equipment provided, if they are a contractor, they should have the say over when they complete the work, what work they complete and who completes it.
3. If you currently have or are planning to engage a contractor, ensure you:

• Allow discretion as to how services are provided
• Require the worker to purchase specific equipment to provide the services
• Require the payment of fees to use systems and access administrative services

Tools and resources

You can view the full decision HERE

The Australian Taxation Office Employee vs Contractor Calculator

The Multi-Factor Test HERE

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Need help writing an employment/contractor agreement? Reach out today! Contact (07) 4051 737 or send us an email at hello@hrdynamics.com.au

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Article by Cameron Agius