18 Aug Delivery driver found not to be an employee on appeal

The Full Bench of the Fair Work Commission (“FBFWC”) has overturned a decision made by Commissioner Cambridge in Diego Franco v Deliveroo Australia Pty Ltd [2021] FWC 2818 that a Deliveroo Australia Pty Ltd (“Deliveroo”) delivery driver, Mr Diego Franco (“Mr Franco”) was an employee protected from unfair dismissal.

Mr Franco brought an unfair dismissal application in relation to Deliveroo’s termination of his engagement as a delivery driver, effective from 30 April 2020.  Commissioner Cambridge rejected Deliveroo’s argument that Mr Franco was an independent contractor and not protected from unfair dismissal and as such, ordered that Mr Franco be reinstated.

In reaching his decision, Commissioner Cambridge considered matters including that:

• Mr Franco was not carrying on trade or business on his own or on his own behalf;

• Mr Franco was working in Deliveroo’s business as part of the business;

• the level of control that Deliveroo had, which it could choose to implement or withdraw strongly supported the existence of an employment relationship rather than independent contracting; and

• although Mr Franco could, and did, work for competitors of Deliveroo, this needed to be assessed in the context of changing workplaces and digital impacts.

On this basis, Commissioner Cambridge found that:

• Mr Franco had been an employee and was protected from unfair dismissal within the meaning of s 382 of the Fair Work Act 2009 (Cth) (“FW Act”).

• Mr Franco had been unfairly dismissed within the meaning of section 385 of the FW Act as his dismissal was harsh, unjust and unreasonable in accordance with the matters prescribed by s387 of the FW Act.

• The appropriate remedy was to reinstate Mr Franco to his employment, maintain the continuity of employment and restore his lost pay pursuant to section 391 of the FW Act.

Deliveroo lodged an appeal on the basis that Commissioner Cambridge erred in his decision regarding jurisdictional issues, failing to determine whether there was a valid reason for termination as required by section 387(a) of the FW Act, giving insufficient weight or undue weight to procedural fairness considerations and on awarding the remedies to Mr Franco.

The appeal was stayed in August 2021 pending the outcome of the decision in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (“Personnel Contracting”). You can access our previous article about this decision here: https://www.hrlaw.com.au/independent-contractors-vs-employees-high-court-looks-to-the-contract/)

On submissions provided post the Personnel Contracting decision, Deliveroo identified six features that the 2019 Agreement between Mr Franco and Deliveroo (“the Agreement”) contained. These are summarised as follows:

• Mr Franco was conducting his own business and the Agreement clearly showed this.

• Mr Franco was not required to personally perform the delivery services and the Agreement gave Mr Franco a right to attain the services of a third party to perform the delivery services.

• Deliveroo did not have the right to control Mr Franco in relation to the performance of the delivery services under the Agreement.

• Mr Franco (or his delegates) were able to simultaneously work for Deliveroo’s competitors.

• Mr Franco supplied the critical equipment required to perform the delivery services.

• The mode and manner of remuneration indicated a contractor relationship.

• Mr Franco was required to obtain third party liability insurance which covered him for the use of a vehicle in the business of food delivery.

As there was no dispute between the parties that the Agreement applied and that it set out the contractual rights and obligations of the parties, the FBFWC at [39] stated that “consistent with Personnel Contracting, the analysis of the question of whether Mr Franco was an employee of Deliveroo at the time of his termination must proceed by reference to the terms of the 2019 Agreement.”

In handing down their decision in Deliveroo Australia Pty Ltd v Diego Franco [2022] FWCFB 156, the FBFWC at [56] found that:

“The Commissioner erred in finding that Mr Franco had been an employee of Deliveroo immediately prior to the termination of his engagement. When we say that the Commissioner “erred”, we of course only mean that in a formal sense since, on the common understanding of the law at the time the Commissioner made his decision, his finding was correct. It is the High Court’s subsequent statement of the law in Personnel Contracting which has rendered the finding erroneous”.  

The decision found that Mr Franco was not a person protected from unfair dismissal within the meaning of section 382 of the FW Act and as such, the Fair Work Commission was unable to determine Mr Franco’s unfair dismissal application and therefore could not have granted the remedies it did.  

This decision may cause delays for those parties seeking to progress the campaign for rights and entitlements for gig workers. 

The full decision can be accessed here:https://asset.fwc.gov.au/documents/decisionssigned/html/2022fwcfb156.htm