Are Uber Drivers Independent Contractors Or Employees?

are uber drivers independent contractors or employees

By Jacob Carswell-Doherty

The California Labor Commission in the United States recently decided that an individual Uber driver was in fact an employee of Uber under Californian employment laws.

Uber takes the view that its drivers are independent contractors, so this decision is at odds with what Uber would like. But it would be unwise to overstate the importance of the decision for Australian drivers.

Two things to be clear about:

  • The decision relates to one person only and not Uber drivers generally; and
  • this is a decision of a Commission (not a court) in California and has little or no bearing on Australian law or Australian Uber drivers.

The question of whether or not Australian Uber drivers are employees or independent contractors is one to be answered by the Courts in Australia, in due course no doubt.

Are Uber drivers independent contractors or employees – the Australian approach

A useful test under Australian law is that found in Hollis v Vabu Pty Limited (2001) 207 CLR 21.

This case concerned a bicycle courier who crashed into a pedestrian and there was an argument about who was responsible for compensation to the injured pedestrian. If the courier was an independent contractor then the courier was responsible. If the rider was an employee then the courier company would have been responsible. The High Court decided the rider was an employee and ordered the company to pay compensation to the pedestrian.

If following the decision in Vabu, an Australian Court will consider at least some of the following questions to determine if the Uber driver is an employee or not:

  • Does Uber set the rates of remuneration? Is there any scope for negotiation of those rates between Uber and the drivers?

Answer: Uber sets the rates and there is no scope for negotiation of those rates.

Suggestive of employment relation.

  • Does Uber allocate the work? Is there scope for bidding for individual jobs by the drivers?

Answer: Uber probably does not allocate the work to drivers, but drivers do not get to bid for jobs – although there is a general call out for a job.

Probably suggestive of contractor relation.

  • Does Uber assume all responsibility as to the direction, training (if any), discipline, job allocation and attire of the drivers.

Answer: Uber would argue not, although Uber does make sure drivers adhere to certain standards and has the power to cancel a driver’s account. There is no uniform or logo worn by drivers and drivers use their own cars.

Probably suggestive of contractor relation.

  • Does Uber provide its drivers with items of equipment including the only means of communication for the purposes of job allocation and control? Do those items remain in Uber’s property.

Answer: The issue of individual mobile phones aside, you can only be an Uber driver if you are authorised as an Uber driver to use the app. There is no other way, currently, to offer your service in NSW in a “ride sharing” capacity.

Suggestive of employment relation.

  • Are Uber drivers required to wear Uber’s livery at all times, to advertise Uber’s services?

Answer: No.

Probably suggestive of contractor relation.

  • Does Uber impose requirements such as insurance and the deductions on the drivers without any opportunity for negotiation?

Answer: This question is somewhat unclear, but from what we understand, Uber drivers are covered by their own insurance policy, as well as Uber’s own insurance policy. Uber would argue the driver’s insurance policy is the main policy and the ‘backup’ Uber policy is there for reasons related more to the legality of ride sharing in NSW generally than anything else.

If this is accepted, it suggests an independent contractor relation.

Other things to consider

There are recent reports that former Uber drivers are lodging unfair dismissal claims in Fair Work Australia against Uber Australia, but there is yet to be a definitive decision on the question.

The ATO recently decided that Uber drivers must charge GST . Accordingly, “affected drivers must register for GST, charge GST on the full fare, lodge business activity statements and report the income in their tax returns”.

If this is the case, it suggests an independent contractor relationship because normally the employer would collect and pay GST.

But to make things even more difficult, in the case of Dick v Voros [2013] FWC 6715, the Fair Work Commission recently decided that although a taxi driver is an independent contractor for tax purposes, they are employees for the purposes of Unfair Dismissal.

Taxi drivers may also be employees for the purposes of workers compensation laws.

If you use the example of taxi drivers, Uber drivers might be considered to be employees for the purposes of the unfair dismissal and workers compensation laws.

Based on the above, there would be a good argument to say that Uber drivers are independent contractors, but it is by no means certain. Every case comes down to the individual circumstances of each driver.

see also: http://www.smh.com.au/business/world-business/uber-contests-california-ruling-that-says-driver-should-be-employee-20150618-ghqwb6.html

Links to other articles:

Unfair dismissal

Post-employment restraint of trade – clients & customers.

Court enforces restraint of trade to protect confidential information.

Employees have duties under Corporations Act when it comes to confidential information.

Employment law page

Intellectual property and employees

Leave a Reply