A landmark unfair dismissal judgment handed down in the food-delivery industry this week could have implications for the real estate sector.
On Tuesday, food delivery company Deliveroo was ordered to reinstate one of its riders, Diego Franco, after a Fair Work Commission tribunal ruled he was unfairly dismissed last April.
The Commission also ruled that Mr Franco was not an independent contractor.
Deliveroo had sacked Mr Franco via email, alleging he had been too slow during the height of the COVID-19 pandemic.
The commission found that Deliveroo regularly tracked its delivery riders and compared their times – known as a “rider experience time” – and used data analytics to identify slow deliverers.
As The Guardian reported, Deliveroo identified Mr Franco’s delivery time as being 10-30 per cent slower than the average delivery time of other riders.
Fair Work Commissioner Ian Cambridge ruled that Mr Franco had been unfairly dismissed, describing his termination as “harsh, unjust and unreasonable”.
John Knight, Managing Director of business consultancy and accountancy group businessDEPOT, said the ruling should be closely watched by the real estate industry (especially anyone who engages with independent contractors).
“I think the real estate industry needs to be very aware of the outcome of this case because it could be used as a precedent,” Mr Knight told Elite Agent.
“In my view, there is a lot of similarity with food delivery drivers, to how independent contractors operate within the real estate industry. Yes, they produce different outcomes, but the effectiveness of independent contractor arrangements has always been questionable.”
Companies such as Uber, Uber Eats, Menulog and Deliveroo have long argued they are not food-delivery or rideshare services but instead provide a platform to allow independent contractors to operate in the food delivery and ridesharing space.
Tuesday’s Fair Work judgment has the potential to further weaken that argument, and as Mr Knight pointed out, there are many workers in the real estate industry that operate as independent contractors.
“Many of these independent contractors might have an ABN, they might get paid on invoice, they might even charge GST, rather than being paid as an employee,” he said.
“But they probably wear a branded shirt, they are often told what systems to use within the office, they probably sit in the office with all the rest of the employees, and they don’t necessarily have a different brand that they push.
“So really, in some real estate businesses, these independent contractors are using a set of systems (a platform) that the real estate brand is providing them – potentially much like a platform that Deliveroo or Uber Eats provides.”
The Fair Work Commission ruling follows a recent announcement from Menulog that it would soon start treating its delivery drivers in Australia as employees instead of independent contractors.
Menulog’s Managing Director Morten Belling made the announcement during a federal Senate Select Committee on Job Security hearing – which has been conducting an inquiry into workers’ rights and wages in Australia’s gig economy – last month.
“We are committed to the safety of our couriers, providing them with insurance cover and a fair income,” Mr Belling said in his statement, as Mashable reported.
“While we are compliant with local laws, we believe there is more we can do for couriers, to better meet our evolved values and moral standards.”
Mr Knight said strictly speaking, an independent contractor “should have as many of the traits of a business as possible”, and that included operators in the real estate sector.
“Many of the authorities talk about the different things that make something a ‘business’ – it might be scale, it might be that they bring some assets, they have control over how they deliver things,” he said.
“When you have a group of people that operate under independent contracting companies, that I’m more comfortable with.
“The question people need to ask themselves is: Are these independent contractors a business? Do they have the characteristics of a business?
“Just because you apply for an ABN and have an ABN, it doesn’t necessarily make you a business.
“When you just have a single sales agent who decides they are an independent contractor, that is when I think things can get really risky.”
Mr Knight warned that incorrectly classifying an employee as a contractor could potentially prove to be a costly lesson for a business.
“Looking at this Deliveroo case for example, I wonder if it will provide a position that the different parties – the Australian Taxation Office and Fair Work, for example – decides to take,” Mr Knight said.
“The alarm bell is, if you have somebody who is calling themselves an independent contractor, but they are deemed to be an employee, then the employer is required to provide leave, superannuation, WorkCover and all the rights of any other employee.
“If, for example, you find out someone should have been paid super, that can add up to be quite a bit.”
Deliveroo has indicated that it plans to appeal the decision handed down by the Fair Work Commission.
“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 company spokesperson told Elite Agent.
“We 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.”
The spokesperson said riders frequently told the company that self-employment was the key reason they choose Deliveroo, “and we will appeal this decision to protect those freedoms”.
Watch this space.