The gig economy – a new category of worker on the horizon?

Over five years ago, in 2015 we wrote a thought piece about the “gig economy” and where it might be headed. Given the gig economy was then only emerging as a part of the broader economy, the impacts, positive and negative, were not yet known. However, we observed that there was potential for workers and employers to successfully leverage technology as a complement or substitute for traditional ways of working.

In 2017, our colleague Ben Dudley, wrote about the continual rise and development of the gig economy. He observed that employment and industrial laws were slow to catch up with these developments but sophisticated businesses would be looking at their structures and operations to stay ahead of the movement.

Now, we come to the start of 2021.

The global pandemic has put a spotlight on gig work in a real and tangible way. On the one hand, platforms have helped us manage during lockdowns, supporting businesses to pivot to online delivery, providing work and allowing those in self isolation to access necessities. At the same time, tragically, a number of food delivery workers lost their lives on the roads, prompting the New South Wales Government to set up a taskforce to investigate the deaths and assess how to improve the safety of such workers.

The fact that contractors generally do not receive paid sick or carer’s leave was also highlighted in the pandemic response. It was reported that a number of ride-share and food delivery platforms moved to cover their partners’ lost income when required to self-isolate – to the benefit of both the individuals and their communities fighting a highly contagious virus. However, those platforms would understandably have been concerned about providing benefits associated with “employment” to those workers and potentially increasing their risk of misclassification claims.

In short, gig work and platforms are continuing to gain traction as a part of the economy, but governments have only recently recognised that the law must evolve to keep pace with them.

In the Report of the Inquiry into Victorian On Demand Work issued in June 2020, Chairperson Natalie James found a “compelling case for change” in relation to the regulation of gig work. The Inquiry’s recommendations included:

• codifying work status in the Fair Work Act (rather than relying on “indistinct” common law tests),
• allowing gig economy workers to bargain collectively with platforms, and
• providing streamlined advice around work status.

The Victorian Government closed public consultations about the Inquiry’s recommendations in October 2020. It is now considering feedback on the Report.

Where to from here?

The correct classification of gig work is critical for both employers and workers because it determines the application of a broad range of entitlements and benefits. However, that issue is inherently uncertain in “borderline cases” where there are factors pointing in opposing directions.

The Fair Work Act currently applies in the main to employees, but leaves the definition of employee versus independent contractor to the common law. This requires employers to weigh up a series of factors, none of which are conclusive. In one case[1], the application of this multi-factor test resulted in a young backpacker engaged by a labour hire company to work on construction sites in Perth being found to be an independent contractor – an outcome which was queried but not overturned on appeal. One judge who sat on the appeal observed:

“It may be thought that the prevalence of trilateral relationships, the evolution of digital platforms and the increasing diversity in worker relationships has evolved in a way that the traditional dichotomy may not necessarily comprehend or easily accommodate“.

The “traditional dichotomy” between employee and independent contractor in the common law was once described by the High Court of Australia as “too deeply rooted to be pulled out”. However, with the growth of the gig economy and other innovative approaches to work it is now likely that the law will change to (at the very least) allow the provision of employment-like benefits to gig workers. There is a push to take the more radical step of defining “employment” in legislation to expand those rights and protections to gig workers. This would represent a marked shift in the law as we know it. Arguably, it could undermine the value of gig work – to provide workers with greater flexibility than traditional employment (for instance the right to set their own schedule and to accept or reject work). It would be preferable for a national approach to be taken rather than a state by state, piecemeal approach if this can be achieved. Whatever comes next, the gig economy will certainly be one of the most interesting legal and policy challenges for employment and industrial relations in 2021 and beyond.

[1] Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2019] FCA 1806; and Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2020] FCAFC 122 (appeal judgment).