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What is the ‘gig economy’ and how does it affect me?

August 14, 2018

By Sooraj Sidhu, NRA Legal

You might have heard in recent months the term ‘gig economy’ being thrown around by politicians, lawyers and leaders in workplace relations.

The term, which has become buzzword of the century, refers to the burgeoning number of workers engaged in short-term or temporary positions, either through labour-hire, independent contractor or freelance arrangements.

With news breaking that popular food delivery company Foodora would be leaving Australia in less than two weeks, the term serves as an interesting topic for discussion as the country awaits the decisions from two cases before the Fair Work Commission (FWC) which will provide more certainty on the true nature of the engagement of gig workers.

Where did the ‘gig economy’ come from?

There are a number of forces behind the rise in short-term jobs, but the main two have been identified as the global financial crisis in 2008 and the rapid development of mobile technologies.

With the ability to perform work on a laptop from anywhere in the world, employees are able to select temporary jobs that best suit their needs and consequently employers have a larger pool from which to select the best candidate. 

Arguably, it is the employer that benefits most in the gig economy, as it provides businesses with the opportunity to save in wages, office space, training, insurance premiums and employee management.

However, for some, there is no substitute for the flexibility and work-life balance that comes with being self-employed. Whilst it is often talked about as “dysfunctional” and a threat to existing labour models, more and more workers and particularly millennials are expressing an interest in flexible and autonomous work.

How has the FWC responded to gig economy workers?

Earlier this year, things remained fairly straight forward after the FWC determined that a Victorian Uber driver was not an employee protected from unfair dismissal.

Following a string of customer complaints, the driver was dismissed for breaching “community standards” but was unsuccessful in his claim having regard for his level of control over the hours he worked, lack of uniform, provision of equipment and ability to work for others.

Since then, there have been two subsequent claims filed against digital platform Foodora by ex-delivery riders and the Fair Work Ombudsman (FWO), once again throwing contemporary work arrangements into a state of uncertainty.

More specifically, the workplace watchdog alleges that the German-headquartered company is in breach of sham-contracting provisions which contribute to the underpayment of wages and failure to make superannuation contributions.

In the FWO’s view, Foodora had misrepresented to its employees that they were independent contractors and exerted a level of control, supervision and direction over their hours, location and manner of work. Further, the workers did not genuinely conduct their own delivery business and therefore ought to receive the minimum entitlements due under the Fast Food Industry Award 2010.

Across the pond it appears the threat to the gig economy is also quite real, with the UK Supreme Court deciding earlier this year that a self-employed plumber was entitled to rights as an employee due to his inability to substitute another person to perform the plumbing services at will.

How will it affect me?

According to a recent survey conducted by the University of Melbourne, there has been a discernible decline in self-employment and independent workers across Australia since 2001. As highlighted in the report, the findings appear “at odds with the widespread commentary [and fear] about the emergence of the ‘gig economy’”.

A similar conjecture was put forward by Griffith University’s Professor of Employment Relations, David Peetz, at the International Labour and Employment Relations Association world congress in Seoul.

In his view, predictions of the demise of traditional employment models, based on high rates of casualisation and independent contractors, ignores the “huge advantages that the employment relationship has for the accumulation of capital”.

Ultimately, it remains to be seen just how far the gig economy will reach up the corporate ladder and impact peoples’ livelihoods.

However, what is clear is that all industries are evolving at a rapid pace and in a way that is not necessarily supported by the Fair Work and Modern Award system implemented in 2010. 

As stated by Deputy President Gostencnik in Kaseris v Rasier Pacific V.O.F. [2017] FWC 6610:

“Perhaps the legislature will develop laws to refine traditional notions of employment or broaden protection to participants in the digital economy. But until then, the traditional tests of employment will continue to be applied.”

In some States, such as Queensland and New South Wales, the government is currently considering plans which will level the playing field and increase liability for gig economy platforms to pay workers’ compensation premiums and minimum rates of pay.

On a national level, the Greens have been the first to introduce legislation to Parliament which would empower the FWC to make “minimum entitlements orders” that bring gig and other “non-standard” workers under the protection of the Fair Work Act 2009 (Cth).

These moves may be a little premature in light of the pending decisions of the FWC. However, they demonstrate the government’s intolerance for alternative work arrangements in the guise of unfair competitive advantages, which begs the question: will Australia evolve with the times and welcome global gig platforms to its digital economy or will it punish those who propose to disrupt the industrial relations landscape?

If you require assistance, or would like more information, please don’t hesitate to contact the National Retail Association on 1800 RETAIL (738 245)


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