Fair work cases; contractor or employee?

Here is a very important decision of the Fair Work Commission delivered by a senior Full Bench which concludes that a food delivery driver who worked for Deliveroo, a business which “provides food and drink delivery services to customers via an online platform made up of various smartphone applications or “apps” was at all material times  not an employee for the purposes of being protected from unfair dismissal.

The decision constitutes an analysis of the trend of recent decisions of the High Court on the issue whether person is engaged as an employee or a contractor.

 

“Introduction

[1] Deliveroo Australia Pty Ltd (Deliveroo) has lodged an appeal, for which permission is required, against a decision of Commissioner Cambridge published on 18 May 2021. 1 The decision concerned an unfair dismissal application made by Diego Franco pursuant to s 394 of the Fair Work Act 2009 (FW Act) arising from the termination of Mr Franco’s engagement as a delivery driver in Deliveroo’s meal delivery business effective from 30 April 2020. In his decision, the Commissioner determined that:

(1) Mr Franco had been an employee of Deliveroo, and was thus a person who was “protected from unfair dismissal” within the meaning of s 382 of the FW Act.

(2) Mr Franco had been “unfairly dismissed” within the meaning of s 385 of the FW Act. This conclusion was based on a finding that his dismissal was harsh, unjust and unreasonable having regard to the matters prescribed by s 387.

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

[2] An order to give effect to the decision was issued on the same date as the decision. 2

[3] In its notice of appeal, Deliveroo contends that the decision was in error in respect of all three of the determinations identified above.

[4] The facts of the matter can be briefly summarised as follows. Deliveroo provides food and drink delivery services to customers via an online platform made up of various smartphone applications or “apps”. Restaurants and other food and drink suppliers advertise their products to customers via the Deliveroo Customer App. Customers can then place orders for particular food and drink products via this app. Once a customer order has been accepted by the supplier (such as a restaurant), an algorithm developed by Deliveroo, known as the Frank algorithm, assesses which of the riders logged in via the Deliveroo Rider App at that time is able to deliver the order most efficiently. The process by which Deliveroo assigns orders to riders for delivery to customers is set out at paragraphs [12] to [17] of the decision. That description is not controversial and we do not reproduce it here.

[5] Mr Franco commenced working for Deliveroo on 22 April 2017 as a delivery rider pursuant to a “supplier agreement” signed on 18 April 2017 (2017 Agreement), using motorbikes which he had purchased himself. He worked regularly for Deliveroo until 30 April 2020. Mr Franco also performed work for Portier Pacific Pty Ltd (Uber Eats) from 6 April 2018 and also with Door Dash from March 2020. Deliveroo and Mr Franco executed a replacement “supplier agreement” on 2 October 2018 (2018 Agreement), and again on 9 December 2019 (2019 Agreement). In April 2020 Mr Franco was identified as a rider with delayed delivery times. Deliveroo determined that the delays were unacceptable and emailed Mr Franco on 23 April 2020 advising that, because he failed to deliver orders within a reasonable time, he was in breach of his agreement with Deliveroo and his agreement would be terminated. On 30 April 2020 Mr Franco’s access to the Deliveroo Rider App was disabled. It is not in dispute that the 2019 Agreement applied at the time Mr Franco ceased working for Deliveroo. This document is set out in full at Attachment A to this decision.

Procedural background

[6] The procedural course of this matter requires some explanation given the delay in its determination.

[7] The appeal in this matter was lodged on 7 June 2021. The notice of appeal included an application for a stay of the order for Mr Franco’s reinstatement. The stay application was heard on 9 June 2021, but the parties subsequently agreed upon the terms of a stay order whereby Mr Franco’s reinstatement would be stayed pending the hearing and determination of the appeal on the condition that Deliveroo paid him a non-refundable amount of $300 per week. A consent order in the agreed terms was made on 9 June 2021. 3

[8] Pursuant to directions made by the Commission, the parties filed written submissions in advance of the hearing of the appeal. The appeal was heard on 19 July 2021. In broad terms, the parties’ written and oral submissions referred to both the terms of the successive contracts between Mr Franco and Deliveroo and the operation in practice of the working relationship between them as relevant to the determination of the issue in dispute as to whether Mr Franco had been an employee of Deliveroo. In approaching the matter this way, both parties proceeded on an understanding (shared by the Commissioner at first instance, and by us at the time) that, in accordance with the principles stated by the High Court in a number of decisions including Stevens v Brodribb Sawmilling Co Pty Ltd 4 (Stevens) and Hollis v Vabu Pty Ltd5 (Hollis), it is necessary to look at the totality of a working relationship in order to determine whether it is one of employment or is an independent contracting relationship. Following the hearing we reserved our decision.

[9] On 4 August 2021, a little over two weeks later, the High Court delivered its judgment in Workpac Pty Ltd v Rossato & Ors 6 (Rossato). The Rossato decision concerned the question of whether a particular employee was employed on a casual basis. However, the judgment of the plurality7 contained a number of statements which called into question the previously-understood approach to identifying an employment relationship based upon Stevens and Hollis. In particular, the plurality said that it was in error to characterise the nature of an employment relationship by reference to “[t]he conduct of the parties to the employment relationship and the real substance, practical reality and true nature of that relationship” in circumstances where the parties had committed the terms of the employment relationship to a written contract.8 The plurality also said:

“The analysis in Hollis v Vabu affords no assistance, even by analogy, in the resolution of a question as to the character of an employment relationship, where there is no reason to doubt that the terms of that relationship are committed comprehensively to the written agreements by which the parties have agreed to be bound.” 9

[10] On 6 August 2021 we issued a statement 10 in which we referred to the relevant passages in Rossato and expressed the view that Rossato potentially raised a number of questions relevant to the determination of this appeal. We also noted that the High Court had granted special leave to appeal against the Federal Court Full Court decisions in CFMMEU v Personnel Contracting Pty Ltd11 and Jamsek v ZG Operations Pty Ltd,12 with these appeals listed for hearing before the Court on 31 August and 1 September 2021, and said that the determination of these appeals was likely to provide authoritative guidance in relation to the principal questions in the matter before us. In these circumstances, we advised the parties that we intended to consider whether the determination of this appeal should be deferred until the two High Court appeals had been heard and determined. We provided an opportunity for the parties to address this question in a short hearing on 13 August 2021.

[11] At the hearing, the parties generally supported the deferral of the matter on the basis that the existing stay order would remain in place. Following this hearing, we issued a decision 13 in which we confirmed that we would defer the determination of this appeal until judgments were handed down in the High Court appeals and that the stay order would continue to operate.14

[12] On 9 February 2022 the High Court published its decisions in CFMMEU v Personnel Contracting Pty Ltd 15 (Personnel Contracting) and ZG Operations Australia Pty Ltd v Jamsek16 (Jamsek). The appeal was then listed for a directions hearing on 14 February 2022 and following this we issued directions for the filing of further written submissions ahead of a further hearing. This further hearing was held on 14 June 2022.

The decision

[13] At first instance, Deliveroo raised a jurisdictional objection to Mr Franco’s unfair dismissal application that Mr Franco was not protected from unfair dismissal under s 382 of the FW Act because he was not an employee of Deliveroo at the time of the termination of his engagement but rather an independent contractor providing services to it. The Commissioner’s consideration of the nature of the relationship between Mr Franco and Deliveroo included an analysis of the multifactorial test as set out in a considerable body of case law (including Hollis). 17 The Commissioner’s consideration examined the following indicia as part of a multifactorial analysis:

(1) The Commissioner found that because of the self-service booking rider engagement system (SSB) utilised by Deliveroo between February 2018 and January 2020 (which required riders to book the sessions they would work in advance and provided preferential access to particular sessions based on a rider’s performance as well as incentivising riders not to cancel engagements), Deliveroo in fact exercised control over Mr Franco’s performance of work in this way. 18 The Commissioner further found that after Deliveroo ceased using the SSB rider engagement system it nonetheless possessed significant capacity to control those who perform work so that, for example, it could decide at any time to re-introduce the rider engagement system.19 The existence of this “significant” capacity for Deliveroo to control the performance of work was supported by the existence of the volume of data in relation to worker utilisation and performance of the work.20

(2) The Commissioner found that Mr Franco was permitted to, and did in fact perform, work for Deliveroo’s competitors, including Uber Eats and Door Dash, sometimes at the same time. 21 The Commissioner was not satisfied that working for Deliveroo and its competitors at the same time was inconsistent with a relationship of employment, instead finding that this was a manifestation of the changes to traditional work arrangements brought about by changes in technology and in response to the Covid-19 pandemic.22 In this context, the Commissioner considered this factor should not be construed as preventing the existence of an employment relationship.23

(3) The Commissioner found that because the terms and terminology of the supply/supplier agreements which applied to Mr Franco during the time he worked for Deliveroo were determined unilaterally by Deliveroo without capacity for Mr Franco to negotiate, this indicium should be treated with some caution in the application of the multifactorial test to the relationship between the parties. 24

(4) Although Mr Franco provided his own equipment, specifically a motorcycle and a smartphone, in the Commissioner’s view this did not represent a substantial capital outlay in order to perform work for Deliveroo because Mr Franco required this equipment for his own personal use in any event. 25

(5) The Commissioner accepted that a requirement of personal service normally suggests the presence of an employment relationship. In this case, Deliveroo permitted Mr Franco to delegate or subcontract the performance of his role if certain conditions were met. Mr Franco in fact never did this. The Commissioner stated that “although the capacity to delegate the work to another is an indicator of an absence of an employment relationship, it does not prevent it”. 26

(6) The Commissioner found that Deliveroo expected Mr Franco to dress in Deliveroo branded clothing and utilise Deliveroo branded equipment, which Mr Franco did. The Commissioner found that although he was not compelled to do so by Deliveroo, Mr Franco was “clearly encouraged” to present himself as part of Deliveroo’s business.27

(7) Mr Franco was paid an amount per delivery. Deliveroo used the data gathered by the Deliveroo Rider App in relation to deliveries completed by Mr Franco to produce invoices and ultimately pay Mr Franco.28

(8) As to taxation, income tax was not deducted by Deliveroo from what it paid to Mr Franco. Income tax and all costs associated with motorcycle maintenance were the responsibility of Mr Franco. However, the Commissioner found that while this typically suggests an independent contractor relationship, in this case it was a reflection of the arrangements established under the supplier agreements between Mr Franco and Deliveroo. 29

(9) Mr Franco was not provided with any leave entitlements in relation to his work for Deliveroo. 30

(10) Although the work performed by Mr Franco did not involve a distinct profession or trade, the Commissioner noted that performing low skilled work has not prevented a finding that a person performing this was other than an employee. 31

(11) The Commissioner did not accept Deliveroo’s submission that Mr Franco was conducting his own business and developing goodwill by presenting himself as a rider for hire to the community at large. On the contrary, the Commissioner was of the view that no evidence had been provided that Mr Franco sought to present himself other than as a Deliveroo food delivery rider. 32

[14] After weighing up the indicia considered as part of the multifactorial approach, the Commissioner found that the relationship between Deliveroo and Mr Franco was one of employment. He stated:

“[139] The conclusion that must be drawn from the overall picture which has been obtained, was that Mr Franco was not carrying on a trade or business of his own, or on his own behalf. Instead, he was working in Deliveroo’s business as part of that business. Importantly, the level of control that Deliveroo possessed, and which it could choose to implement or withdraw, whilst not immediately apparent, when properly comprehended, represented an indicium that strongly supported the existence of employment rather than independent contracting. In addition, the fact that Mr Franco could and did work for competitors of Deliveroo, must be assessed in the context of a modern, changing workplace impacted by our new digital world. Mr Franco was, despite aspects of his relationship with Deliveroo including elements usually associated with that of an independent contractor, engaged in work as a delivery rider for Deliveroo as an employee of Deliveroo.”

[15] The Commissioner then went on to consider whether Mr Franco’s dismissal was harsh, unjust or unreasonable. Relevantly, the following findings were made in this regard pursuant to s 387:

  • The reason provided for Mr Franco’s dismissal was “failing to deliver orders in a reasonable time [in] breach of your supplier agreement”. The Commissioner was satisfied for the purpose of s 387(a) that this was not a valid reason for Mr Franco’s dismissal related to his capacity or conduct because he was not provided with any clear indication of the delivery times that were expected of him. 33
  • The Commissioner found under s 387(b) that Mr Franco was provided with seven days’ notice of termination in the form of an email, 34and observed that given the impact that termination can have on an individual “basic human dignity requires that a matter of such gravity should be conveyed personally.”35
  • It was not contested for the purpose of s 387(c) that no opportunity was provided to Mr Franco to respond to Deliveroo’s decision to terminate, 36that accordingly there was no opportunity for him to have a support person at a meeting to discuss his termination because no such meeting occurred (s 387(d))37 and that, for the purpose of s 387(d), Mr Franco was not warned about any unsatisfactory performance prior to the decision to terminate.38
  • Deliveroo is not a small business employer, its size should have enabled it to have acceptable practices and procedures in place, 39and it had access to internal expertise in relation to such matters40 (s 387(e) and (f)).
  • There were no other relevant matters requiring consideration under s 387(g). 41

[16] The Commissioner’s ultimate finding was as follows:

“[160] In summary, the termination of Mr Franco’s supplier agreement with Deliveroo was a dismissal from employment. The dismissal of Mr Franco was without valid reason involving established misconduct or capacity inadequacy. Further, the dismissal involved an entirely unjust and unreasonable process including the complete absence of any opportunity for Mr Franco to be heard before the decision to dismiss was made. Consequently, upon analysis of the various factors that are identified in s. 387 of the Act, an objective and balanced evaluation of all of the relevant circumstances has provided compelling basis to establish that the dismissal of Mr Franco was harsh, unjust and unreasonable. Therefore, the applicant’s claim for unfair dismissal remedy has been established.”

[17] In respect of the remedy to be granted, the Commissioner found that reinstatement would be appropriate and, in doing so, took into account that, although Mr Franco had participated in the Transport Workers Union’s “gig worker” campaign which had publicly criticised Deliveroo, the remote and online nature of the working relationship between Deliveroo and its delivery workers supported the conclusion that there had not been a genuine loss of trust and confidence such that the employment relationship could not be successfully and harmoniously re-established. 42 The Commissioner also concluded that, in any event, “Mr Franco had every justification for being aggrieved by the callous and perfunctory termination of his services, and any criticism of Deliveroo’s conduct was understandable”.43 The Commissioner concluded as to remedy:

“[166] In the particular circumstances of this case, the primary remedy of reinstatement would represent an appropriate and just rectification that reflected a termination that was most notable for its absence of compassion. Irrespective of whether Mr Franco was a contractor or an employee, it was plainly unconscionable to terminate what would be well understood to be his primary source of income, without first hearing from him. The capacity to undertake a detailed analysis of Mr Franco’s performance statistics should not remove the human factor. Therefore, reinstatement would be appropriate in all of the circumstances of this case.”

Appeal grounds

[18] Deliveroo’s appeal grounds are set out in detail in its notice of appeal filed on 7 June 2021 under the headings of jurisdiction, valid reason, procedural fairness, and remedy. Because, as we discuss later, the decisions in Personnel Contracting and Jamsek have changed the applicable legal framework, some of the appeal grounds in the notice of appeal are no longer relevant. However, for completeness, the appeal grounds may be summarised as follows:

Jurisdiction

  1. The Commissioner erred in concluding that Mr Franco was an employee of the Deliveroo and therefore protected from unfair dismissal for the purposes of s.382(a) of the FW Act (Decision at [137]-[139]).
  2. The Commissioner erred in determining that Mr Franco was an employee, such conclusion being contrary to the Full Bench decision in Gupta v Portier Pacific Pty Ltd [2020] FWCFC 1698 (Gupta).
  3. The Commissioner erred in failing to properly apply a multifactorial test when determining if Mr Franco was an employee or a contractor, the Commissioner instead unduly focusing on whether Mr Franco was carrying on his own trade or business (Decision at [139]).
  4. The Commissioner erred in failing to apply the multifactorial test as to whether a person is an employee or contractor as developed by the common law, the Commissioner impermissibly re-interpreting this common law test by reason of Mr Franco providing his services to Deliveroo via a technological platform.
  5. In reaching the conclusion that Mr Franco was an employee of Deliveroo, the Commissioner erred by making various findings in relation to, or giving insufficient weight to, a number of factors set out in the notice of appeal.

Merits – Valid reason

  1. The Commissioner erred by failing to determine, as required by s.387(a) of the FW Act, whether there was a “valid reason” for the termination, the Commissioner instead substituting a different statutory test, namely, whether the termination was “sound, defensible, and well founded” (Decision at [145]and [147]).
  2. When purporting to address whether any termination was for a “valid” reason within the meaning of that term in s.387(a) of the FW Act, the Commissioner in error impermissibly narrowed the meaning of that term by determining that a reason for termination could only be “valid” if the employee was made aware that conduct of that nature was “directly contrary to the continuation of the employment” (Decision at [145] and see also [147]).
  3. Further to ground 7, the Commissioner erred by concluding that there was no valid reason for termination despite the Commissioner finding that the fundamental reason for the termination was that Mr Franco was, in the four week period prior to his termination, delivering orders considerably more slowly than other comparable delivery persons (Decision at [144]).
  4. In determining whether the failure to make deliveries in a reasonable time was a valid reason, the Commissioner erred in failing to have regard to the following:
  5. Mr Franco was engaged to deliver food and drinks to customers, where the necessity to deliver orders promptly would have been obvious as a matter of common sense (especially with the delivery of hot food);
  6. the terms of Mr Franco’s 2019 supplier agreement required any delivery services to be completed “within a reasonable time” (cl.2.5.1);
  7. on 3 February 2020, by email, Mr Franco was notified that a number of his deliveries took longer to reach customers than expected.

Merits – Procedural fairness

  1. The Commissioner erred by giving insufficient weight to the fact that Mr Franco was notified on:
  2. 3 February 2020, by way of email, that his supplier agreement may be terminated because of the identified delays with his delivery times (Decision at [31]);
  3. 19 October 2017, 22 February 2018, 4 February 2019 and 22 January 2020, by way of email, that he had marked an order as delivered when the order had not been delivered and that such conduct could lead to the termination of his supplier agreement (Decision at [29]).
  4. Further to ground 10, the Commissioner erred by giving weight or undue weight to the fact that Mr Franco was terminated by written notice via email (rather than a telephone call) (Decision at [149]-[150]), especially in circumstances where:
  5. the relationship between Deliveroo and Mr Franco was almost entirely conducted via email and the Deliveroo Rider App;
  6. the relationship between Deliveroo and Mr Franco was characterised by a “level of remoteness”, as found by the Commissioner (Decision at [164]);
  7. the 2019 supplier agreement provided that a notice of termination be in writing (cl.10.2).

Remedy

  1. The Commissioner erred in exercising his discretion to reinstate Mr Franco by failing to give any or any sufficient weight to the fact that Mr Franco participated in a public media campaign against Deliveroo during which he:
  2. described Deliveroo’s treatment of riders as “appalling”;
  3. criticised the entirety of Deliveroo’s delivery model because Deliveroo “makes” riders wait a long time at restaurants;
  4. asked that the Government to look into Deliveroo’s practices and his own case;
  5. stated that “riders are suffering” at Deliveroo; and
  6. falsely said that when the 2019 supplier agreement was terminated, he was left without any income, when in fact, at that time, Mr Franco was earning an income from other sources, including two of Deliveroo’s competitors, Uber Eats and Doordash (Decision at [34]).
  7. The Commissioner erred in finding that there had not been a genuine loss of trust and confidence such that “the employment relationship could not be successfully and harmoniously re-established” (Decision at [164]), such finding being not open given the conduct engaged in by Mr Franco as referred to in ground 12 above.
  8. Further to ground 13, the Commissioner erred in finding that reinstatement was appropriate in circumstances where the conduct engaged in by Mr Franco as referred to in ground 12 above and/or the fact that Mr Franco provided services for direct competitors of Deliveroo demonstrated that the requisite loyalty and fidelity necessary for an employment relationship did not exist.
  9. The Commissioner erred in exercising his discretion to reinstate Mr Franco by taking into account an irrelevant consideration, namely, whether an order of reinstatement would represent a “just rectification” for a termination that had an “absence of compassion” (Decision at [166]).

Submissions

[19] It is only necessary for us to refer to the parties’ submissions made post-Personnel Contracting and Jamsek, since the earlier submissions were, to a large degree, rendered superfluous or irrelevant by those decisions.

Deliveroo

[20] Deliveroo submitted that, because of the decisions in Personnel Contracting and Jamsek, “the way in which the relationship between Mr Franco and Deliveroo operated in practice” is now irrelevant to the task of determining its legal character and that, where there is a written contract between the parties as in this case, the characterisation of the work relationship is to be determined by considering the terms of the contract between the parties. In this respect, it was submitted, the 2019 Agreement is a comprehensive written statement of the parties’ contractual rights and obligations in their relationship. Deliveroo submitted that it is now “unmistakably” the case that the relationship between Mr Franco and Deliveroo was not one of employment, and it identified six features of the 2019 Agreement which it contended clearly showed this:

(1) Mr Franco was conducting his own business in providing the delivery services. Clause 2.1 of the 2019 Agreement authorises Mr Franco to “arrange” for delivery services to be provided to Deliveroo. This, combined with the statement in paragraph A of the Background of the 2019 Agreement that Mr Franco “is a supplier in business on [his] own account who wishes to arrange the provision of delivery services to Deliveroo” makes clear that Mr Franco was conducting his own business. Deliveroo submitted that the relationship between the parties was such that Deliveroo was in the business of operating the delivery app and Mr Franco was in the business of providing delivery services. It was not the case that Mr Franco was “integrated” into Deliveroo’s business pursuant to the 2019 Agreement. Deliveroo further submitted that these circumstances were in contrast to those in Personnel Contracting because Deliveroo’s business was in no way dependent on any capacity to control suppliers of delivery services (including Mr Franco). It was not relevant to the question of whether Mr Franco was conducting his own business that the services he provided to Deliveroo could be described as “low-skilled”, and Deliveroo cited observations of Gordon J in Personnel Contracting in support of this. 44

(2) Mr Franco was not required to personally perform the delivery services. Clause 9.1 of the 2019 Agreement provides an unfettered right to Mr Franco to procure another person to perform the delivery services, without prior approval from Deliveroo, subject to the exception that the person had not previously had their supplier agreement terminated by Deliveroo. It was submitted that this right to delegate was “fundamentally antithetical to an employment relationship” and was instead “a clear indicator of a contractor relationship”.

(3) Deliveroo did not have the right to control Mr Franco in relation to the performance of the delivery services under the 2019 Agreement. Deliveroo submitted that its lack of control over: whether Mr Franco logged in to the Deliveroo Rider App; where Mr Franco worked; the timing and duration of periods of work and whether Mr Franco accepted or rejected particular orders once logged in, clearly indicated that there was no dependent relationship between the parties. In Deliveroo’s submission this was in contrast to the circumstances considered in Personnel Contracting, and indicated that there was no employment relationship between Deliveroo and Mr Franco. Mr Franco retained substantial discretion in the performance of the delivery services, which highlighted the absence of any contractual right for Deliveroo to control his performance. Although clause 2.5.2 of the 2019 Agreement requires that Mr Franco (or his delegate) “be professional in their dealings with Deliveroo staff, other riders, restaurant personnel and members of the public and provide the Services with due care, skill and ability”, it was submitted that this control was broadly framed and not inconsistent with a contractor relationship. It was submitted that the extent of control vested in Deliveroo under the 2019 Agreement “[fell] well short” of that in Jamsek, where a contractor relationship was found to exist.

(4) Mr Franco (or his delegates) were able to simultaneously work for Deliveroo’s competitors. Deliveroo submitted that the “unfettered” ability in clause 2.2 of the 2019 Agreement for Mr Franco to work for its competitors was indicative of an independent contractor relationship. This was particularly so, it was submitted, when it was possible to work for competitors at exactly the same time as performing work for Deliveroo. Were an employee to purport to work for an employer’s competitor at the same time as working for the employer, Deliveroo submitted that it would not be possible for the putative employee to discharge their obligations of good faith and fidelity to both employers at the same time, and therefore that such an arrangement was incompatible with an employment relationship.

(5) Mr Franco supplied the critical equipment required to perform the delivery services. Deliveroo submitted that Mr Franco was required to supply his own delivery vehicle and mobile phone pursuant to clauses 2.1 and 4.1 of the 2019 Agreement. This reflected the fact that Mr Franco conducted his own business and that Deliveroo lacked the requisite control to establish an employment relationship.

(6) The mode and manner of remuneration indicates a contractor relationship. Deliveroo submitted that clause 5 of the 2019 Agreement which pertains to fees and invoicing indicates a contractor relationship. Relevantly, clause 5.1 states that payment to Mr Franco was tied to completion of delivery services. It was submitted that this was in contrast to Personnel Contracting where there was no entitlement to payments that accrue in respect of time spent performing services or being ready to work. In addition, Deliveroo submitted that it was significant that payments were made to Mr Franco on the basis of invoices under clause 5.4. Mr Franco was required to pay Deliveroo an administrative fee pursuant to clause 5.3, which it was submitted was “unknown in the context of an employment relationship”. Finally, Deliveroo pointed to Mr Franco retaining responsibility for payment of any tax and ensuring he had an ABN consistent with clause 5.6 was consistent with a contractor relationship.

[21] Deliveroo also highlighted that 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 under clause 7.1 of the 2019 Agreement. It was submitted that this indicated a contractor relationship because, in an employment relationship, it would be the employer taking out insurance coverage on its own behalf in relation to potential vicarious liability, whereas here this insurance was for Mr Franco’s own liability. Further, clause 8.1 of the 2019 Agreement stipulates that Mr Franco was liable for any losses suffered by Deliveroo resulting from negligent provision of the services by him or his delegate. It was submitted that this was inconsistent with an employment relationship, specifically that it “would be virtually unknown” in that context.

[22] Finally, Deliveroo identified the power to terminate the 2019 Agreement as a matter weighing in favour of a contractor relationship rather than one of employment. Clause 10.1 provides that Mr Franco can terminate the agreement with immediate effect without cause. Deliveroo under clause 10.2 can terminate the 2019 Agreement at any time and for any reason on providing one week’s notice in writing. Further, it was noted that clause 10.3, which provides a right for Deliveroo to terminate the 2019 Agreement for any serious misconduct type of issue on the part of Mr Franco (or his delegate) was expressed in terminology consistent with a contractor relationship.

Mr Franco

[23] Mr Franco submitted that, properly construed, the operative terms of the 2019 Agreement demonstrate he was Deliveroo’s employee because:

(1) he was subordinate to Deliveroo’s business and was serving in it, rather than in any business of his own;

(2) he was subject to Deliveroo’s authority and right to exercise control over his performance of work once he accepted a delivery, and this was an essential aspect of Deliveroo’s business; and

(3) his performance of work for Deliveroo was dependent on, and subservient to, Deliveroo’s business.

[24] Mr Franco submitted that Deliveroo’s submissions failed to properly construe the 2019 Agreement, the meaning of which is to be determined according to what a reasonable person would have understood its terms to mean, having regard to the language used, the surrounding circumstances known to the parties and the purpose and object secured by the contract. Further and in the alternative, Mr Franco submitted that some of the terms of the 2019 Agreement are pretences or “sham devices” crafted to avoid the relationship between the parties being characterised as one of employment, and do not reflect the reality of the relationship. In these circumstances, Mr Franco submitted, the surrounding facts must be considered so that Deliveroo is not able to contract out of the FW Act.

[25] Mr Franco referred to seven objective factual circumstances which, he submitted, would have been known by a reasonable person in the position of the parties at the time the 2019 Agreement was entered into. These were that:

  • Deliveroo conducted a food delivery business operated via its electronic platforms. Customers created accounts with Deliveroo to enable them to order food from restaurants by using a mobile phone application or the website, and orders could only be made from restaurants that had entered into contracts of service with Deliveroo.
  • When a customer ordered food via the Deliveroo Customer App or website, the restaurant could accept the order using either a tablet device or a separate mobile app. After the restaurant accepted the order, the customer was notified. Deliveroo’s system was to arrange the delivery of meals from restaurants using riders, such as Mr Franco, whom it had contracted with under supplier agreements. Deliveroo selected a rider that its algorithm determined was best placed to perform the work and had exclusive control over which riders were offered the order.
  • Ordinarily Deliveroo’s riders were the only humans with whom customers and restaurants had any interaction.
  • Timeliness in collection from restaurants and delivery of orders to customers was an important aspect of Deliveroo’s business, as was the provision of a positive customer experience by the efficient delivery of meals by riders.
  • Deliveroo had the unilateral capacity to develop and implement systems through its control of its technological platforms to enable it to determine when and how riders would perform work in order to meet anticipated customer demand and ensure the timely and efficient provision of services to its customers. During the course of Mr Franco’s employment, Deliveroo had devised and imposed the SSB, which applied to Mr Franco at the time of entry into the 2019 Agreement. As the Commissioner found, Deliveroo could exercise significant control over when, where and for how long Mr Franco worked if it chose to do so.
  • Deliveroo had exercised detailed control and direction over Mr Franco in his performance of delivery work in the period preceding the execution of the 2019 Agreement, including by reprimanding Mr Franco for allegedly marking orders as delivered when the customer indicated they had not been made and falsely marking himself as being at a restaurant and/or marking an order as “delivered”.
  • The contractual rights imposed on Mr Franco at the time he had commenced working for Deliveroo under the 2017 Agreement included obligations to supply services at times which met Deliveroo’s reasonable requirements, to log on to the Deliveroo Rider App and accept any orders which he was able to accept, to inform Deliveroo of changes to his availability or if he was unable to supply services when he had agreed to do so and to comply with the Service Delivery Standards, including with respect to dress.

[26] Mr Franco submitted that these objective background facts were relevant to the construction of the 2019 Agreement and demonstrated that its purposes and objects were for Mr Franco to:

(1) deliver food as part of Deliveroo’s business by transporting food from restaurants to customers in circumstances where he had no contractual or other relationship with the customers;

(2) deliver the food in a timely and efficient manner in order to avoid Deliveroo’s business being harmed, given that he was the human emanation of Deliveroo; and

(3) work in Deliveroo’s business in accordance with the confines of the controls of Deliveroo’s technological platforms which were solely operated and controlled by it.

[27] Mr Franco submitted that the provisions under the heading “background” in the 2019 Agreement, which were relied upon by Deliveroo in its submissions, are irrelevant to the question of characterising the relationship between the parties because they are descriptive. In addition, Mr Franco identified a number of assertions that Deliveroo made which were to do with actual practice under the 2019 Agreement and therefore were not relevant background facts. Those include assertions as to the platform Deliveroo operated from January 2020 and Mr Franco engaging in “multi-apping” which it said was post-contractual conduct and therefore not relevant to construction of the 2019 Agreement which was executed in 2019.

[28] As to the terms of the 2019 Agreement, Mr Franco made the following submissions:

  • Regarding when and where work is performed, although clause 2.3 states that it is “entirely up to” the rider whether to perform work for Deliveroo at all, it is not the case that clause 2.3 establishes a “free log-in system”. Rather, Mr Franco contended that clause 2.3 commits Deliveroo only to permit riders to perform work at times and in areas “where Deliveroo anticipates a need for riders” and not perform work “willy-nilly” whenever and wherever the rider wishes. In addition, clause 2.3 refers to the operation of a SSB tool which will be made available where Deliveroo has a need for services in advance, to enable riders to book shifts to perform work for Deliveroo at a particular place and time. Where a rider elects to book a “session” at a particular time through the SSB tool, clause 2.3 requires Deliveroo to permit the rider to perform work at that time.
  • Clause 2.5.1 creates a contractual obligation upon riders, where they accept and do not un-assign from an order, to attend the relevant restaurant, collect and deliver the customer’s order in an expeditious and efficient manner. In addition, Mr Franco contended that clause 2.5.2 purports to impose general obligations upon riders whenever they are performing “Services” which encompasses any time when a rider has logged into the Deliveroo Rider App and has accepted and not un-assigned from a delivery. It is not limited to times where the rider is actually performing a delivery. The obligations include to behave professionally towards persons such as members of the public who may have nothing to do with the work being performed by the rider at that time, which Mr Franco submits is consistent with riders being a representative of Deliveroo and part of its business. Mr Franco further submitted that the obligation upon the rider to provide the services with due care, skill and ability is a manifestation of control by Deliveroo over the rider as to the manner in which work is performed.
  • Clause 3 affords Deliveroo contractual power to determine the manner in which riders perform work by requiring them to comply with its own work health and safety guidelines. These guidelines may be issued by Deliveroo at any time. Mr Franco contends that the obligation in clause 3.1 goes further than the obligation imposed on “workers” as defined in the Work Health and Safety Act 2011 (NSW) to comply with “reasonable instructions” of a person conducting a business or undertaking. 45Clauses 3.2 to 3.4, which oblige riders to report accidents or near misses to Deliveroo and require them to comply with any inquiries or investigations which may be undertaken, were identified by Mr Franco in his submissions as inconsistent with a relationship of independent contracting.
  • Clause 4.2, which obliges riders to comply with legal requirements relating to use of their vehicle, ensure their vehicle was roadworthy and not work while affected by drugs or alcohol, is significant. Clause 4.2.1 is supplemented by a warranty in clause 6.1.3 that a rider is proficient in the use of their vehicle and will comply with the applicable road rules while performing work. In addition, clause 4.2.3 requires riders only to use food transportation and road safety equipment that complies with Deliveroo’s safety standards. Mr Franco submitted that these requirements are examples of Deliveroo exercising control over the manner in which deliveries are performed and suggest the presence of an employment relationship, not an independent contracting relationship.
  • Clause 6.1.4 is significant because it imposes a contractual obligation on the rider to permit Deliveroo to track them at all times whilst providing services for the purpose of fulfilling Deliveroo’s obligations to its customers.
  • Clauses 10.2 to 10.3, which create rights for Deliveroo to terminate the 2019 Agreement, demonstrate significant contractual control because they permit Deliveroo use sanctions to deal with non-performance of obligations under the agreement. Although clause 10.1 provides Mr Franco with the right to terminate the 2019 Agreement for any reason, this clause is not significant in determining the question of classification of the relationship between the parties.
  • Clause 11 demonstrates that Mr Franco was working as part of Deliveroo’s business rather than as part of an independent enterprise conducted by him because it created a framework for the use and safeguarding of confidential and customer information to which Mr Franco had access for the purposes of performing work for Deliveroo. Further, any goodwill and customer connection was Deliveroo’s and not Mr Franco’s.

[29] Mr Franco submitted that a number of terms in the 2019 Agreement were neutral and did not contraindicate an employment relationship. Specifically:

  • Although clauses 2.2 and 2.4 of the 2019 Agreement permit Mr Franco to accept or reject and unassign orders, this does not contraindicate an employment relationship and rather is akin to casual employment, where employees are not required to accept or perform work at all.
  • The requirement under clause 4.1 for Mr Franco to provide “equipment necessary to provide the Services” is not inconsistent with an employment relationship.
  • Clause 8.1, which requires a rider to indemnify Deliveroo should it suffer loss as a result of negligence on the part of the rider or their delegate, is premised on the label assigned to the relationship between the parties. In Mr Franco’s submission, this term would have no effect should the relationship be characterised as one of employment because of s 3(1) of the Employees Liability Act 1991 (NSW).
  • The contractual capacity for Mr Franco to delegate performance of the services, as set out in clause 9 of the 2019 Agreement, does not prevent the relationship being one of employment.
  • Clause 7.1, which requires Mr Franco to ensure that the vehicle he used was insured does not contraindicate an employment relationship. Because clause 7.1 contemplates Deliveroo providing free third party liability insurance, this supports the contention that the relationship between the parties was one of employment because it suggests Deliveroo recognised that the delivery services were undertaken as part of its business and that risks to third parties were matters against which it should, and did in fact, make provision.
  • Taxation arrangements should be given little weight, and the mode of remuneration paid to Mr Franco was also neutral.

[30] In the alternative, should we not be satisfied from the terms of the 2019 Agreement that Mr Franco was Deliveroo’s employee, Mr Franco submitted that aspects of the 2019 Agreement should be regarded as no more than pretences or sham terms, and therefore be disregarded in characterising the relationship between the parties. In this regard, Mr Franco submits clause 9.1, which provides a contractual right for Mr Franco to delegate performance of work, was demonstrated by the evidence to be without substance. It was submitted that the evidence established that Mr Franco never delegated work, it would have been uneconomical to do so because of the “measly sums” paid by Deliveroo for work, there was no evidence that workers would accept Mr Franco’s offer of delegation, and it did not make sense for a worker to work as Mr Franco’s delegate rather than perform work for Deliveroo on their own behalf. Mr Franco also submitted that terms of the 2019 Agreement which Deliveroo says confer rights of control consistent with an employment relationship are also shams or pretences because in practice the evidence demonstrated that Deliveroo assumed detailed direction and control over Mr Franco’s performance of work, such that the express provisions which seek to deny the existence of this control are ineffectual.

Consideration

Permission to appeal

[31] Had this appeal been concerned only with the Commissioner’s finding that Mr Franco’s dismissal was unfair, and his decision to order reinstatement, maintenance of continuity of employment and restoration of lost pay as a remedy, we would not have been satisfied that the grant of permission to appeal would be in the public interest for the purpose of the requirement in s 400(1) of the FW Act. The Commissioner’s consideration of these matters was orthodox, had regard to the matters required to be taken into account by the FW Act, and was not attended by any significant error of fact. We consider that it was reasonably open for the Commissioner to make the evaluative judgment that the reason relied upon by Deliveroo for Mr Franco’s termination, namely that he had failed to deliver orders in a reasonable time, was not valid in circumstances where Mr Franco had never been clearly advised of the delivery time standards he was expected to achieve. The Commissioner’s finding of a lack of a valid reason, coupled with an undeniable failure to afford Mr Franco procedural fairness, rendered inevitable the Commissioner’s conclusion that the dismissal was harsh, unjust and unreasonable. The Commissioner’s determination as to remedy equally involved an orthodox and unremarkable exercise of the discretion under ss 390 and 391 of the FW Act.

[32] However, the question of whether or not Mr Franco was an employee of Deliveroo gives the appeal a different dimension: it is a jurisdictional question, and also one that is of broader potential interest and application since it concerns the application of the principles in Personnel Contracting and Jamsek to the “gig economy”. Further, for the reasons which follow, we consider that Deliveroo’s appeal has substantial merit. Accordingly, we consider that the grant of permission to appeal would be in the public interest, and permission is therefore granted.

Personnel Contracting and Jamsek

[33] The key propositions in Personnel Contracting which are to be applied in this appeal are to be derived from the judgment of Kiefel CJ and Keane and Edelman JJ, and from the judgment of Gordon J (with whom Steward J agreed as to the relevant principles but not the outcome). Although Gageler and Gleeson JJ formed part of the majority in Personnel Contracting, the approach they took to the analysis whereby the “totality of the relationship”, including both the terms of the employment contract and the manner of performance of the contract, must be considered 46 no longer commands majority support in the High Court. Gageler and Gleeson JJ noted that the approach they preferred was one previously applied by trial and intermediate courts in Australia,47 as well as by the High Court,48 and it was certainly the approach applied by the Commissioner in the decision under appeal (as well as by the parties before us in their submissions made prior to Personnel Contracting).

[34] We respectfully adopt the summary of the key propositions in Personnel Contracting stated in the Full Bench decision in Chambers and O’Brien v Broadway Homes Pty Ltd 49 as follows:

(1) When characterising a relationship regulated by a wholly written, comprehensive contract which is not a sham or otherwise ineffective, the question is to be determined solely by reference to the rights and obligations under that contract. It is not permissible to examine or review the performance of the contract or the course of dealings between the parties. 50

(2) The subsequent conduct of the parties may be considered to ascertain the existence of variation of contractual terms. 51

(3) The multifactorial approach only has relevance in respect of the required assessment of the terms of the contract. 52

(4) It is necessary to focus on those aspects of the contractual relationship which bear more directly upon whether the worker’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise. 53 The question is: whether, by the terms of the contract, the worker is contracted to work in the business or enterprise of the purported employer.54

(5) Existence of a contractual right to control the activities of the worker (including how, where and when the work is done) is a major signifier of an employment relationship. 55

(6) The label or characterisation placed on the relationship by the contract is not relevant even as a “tie breaker”, 56 or at least it is not determinative.57

[35] To this, it is relevant to this appeal to add one further proposition, namely that a contractual freedom on the part of the party performing the relevant work to accept or reject any offer of work and to work for others is not necessarily a contraindication of employment and may rather be consistent with casual employment. 58

[36] Jamsek involved the question of whether two truck owner-drivers performing deliveries on an exclusive and long-term basis for a company were employees of that company. Although the High Court unanimously held that they were not employees of the company, the reasons given for reaching that conclusion differed between the three judgments delivered. Kiefel CJ and Keane and Edelman JJ, applying the principles stated by them in Personnel Contracting, emphasised that the relevant contracts were between the company and partnerships consisting of the truck driver and his spouse, that it was the partnerships that owned and provided the trucks as well as the skills of the driver, that the drivers were through their partnerships engaged in the conduct of their own businesses, and that because the drivers were only associated with the company as members of the partnerships with which the company contracted, there was no basis for concluding that the drivers were employed by the company. 59 Their Honours rejected the relevance of an “expectation” that the drivers wear company-branded clothing and display the company logo on their trucks, finding that such “expectations” did not alter the contractual rights and obligations which characterised the relationship between the partnerships and the company.60 Their Honours also regarded a requirement in the contracts that the partnerships perform deliveries “as reasonably directed” as concerning what carriage is to be undertaken rather than how it was to be carried out.61

[37] Gageler and Gleeson JJ identified two matters as being critical: first, that the partnership maintained the truck provided to perform the delivery obligations under the contract and, second, that the company contracted with a partnership, not an individual. 62 In relation to the first matter, their Honours said:

“[88] The first is that Mr and Mrs Jamsek were obliged to, and did, maintain the truck which was used to perform the 1993 contract. A relationship of employment is a relationship of personal service. Personal service is not inherently inconsistent with the individual who provides service being responsible for the physical means by which his or her service is provided. Bicycle couriers were found to be employees in Hollis v Vabu Pty Ltd despite having used their own bicycles, just as Mr McCourt has been found to be an employee in CFMMEU despite having purchased and presumably used his own hard hat. But acceptance by the plurality in Hollis that motor vehicle couriers and motorbike couriers in contractual arrangements similar to the bicycle couriers might not have been employees shows that questions of scale can be important and even decisive. Where work contracted for, actually performed by an individual, and paid for, involves use of a substantial item of mechanical equipment for which the provider of the work is wholly responsible, the personal is overshadowed by the mechanical. That was recognised by this Court in Humberstone v Northern Timber Mills and again in Wright v Attorney-General for the State of Tasmania. Those cases were cited as authorities for that proposition in Neale v Atlas Products (Vic) Pty Ltd; they support what has become the ‘conventional view’ that ‘owners of expensive equipment, such as [a truck], are independent contractors’.” (footnotes omitted)

[38] Gordon and Steward JJ identified some matters in the contract which suggested a relationship of employer and employee, 63 but (like the plurality) found that the contractual obligation for the partnerships to carry goods as reasonably directed was only control of a particular kind, being a power to give directions to make deliveries rather than to direct how that should be done.64 Their Honours concluded:

“[107] Assessing the totality of the relationships between the partnerships and ZG as set out in the 1993 Contract, Mr Jamsek and Mr Whitby were not employed by ZG. The partnerships, not Mr Jamsek and Mr Whitby, were the contracting parties. The partnerships each contracted to provide, to operate and to maintain a truck to carry ZG’s goods to its customers. The partnerships were entitled to invoice ZG for carrying the goods that they carried. It is true that the 1993 Contract between the partnerships and ZG addressed the obligations of the partnerships providing drivers. But that is to be expected. A truck could not in 1986 or 1993 carry and deliver goods without a driver.”

The 2019 Agreement

[39] There was no dispute between the parties that the 2019 Agreement applied at the time of the termination of Mr Franco’s engagement and that it comprehensively set out in whole the contractual rights and obligations of the parties. Accordingly, 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.

[40] We will begin by identifying those terms of the 2019 Agreement which we consider to be mere labelling. Paragraph A of the “Background”, which was relied upon by Deliveroo, and also clause 5.6, refer to Mr Franco as being “a supplier in business on your own account”. This is a descriptive assertion rather than a substantive contractual right or obligation and is therefore to be given little or no weight in the analysis.

[41] We also place little weight on those provisions of the 2019 Agreement which are merely consequential upon the labelling adopted in the agreement. In this respect, we rely upon the following passage in the Federal Court Full Court decision in ACE Insurance Limited v Trifunovski 65 which, insofar as it proceeds on an analysis of the contractual terms, has not we consider been overtaken by Personnel Contracting:

“[37] It is also difficult, in my view, to give much independent weight to arrangements about taxation, or even matters such as insurance cover or superannuation. These are reflections of a view by one party (or both) that the relationship is, or is not, one of employment. For that reason, in my view, those matters are in the same category as declarations by the parties in their contract (from which they often proceed). They may be taken into account but are not conclusive. These matters are less important than the adoption by the parties (where this occurs) of rights and obligations which are fundamentally inconsistent with basic requirements of a contract of employment, such as the ability to delegate the discharge of obligations under a contract to another person, or where there is a lack of control over how work is done.”

[42] Thus clause 5.6, under which Mr Franco is required to pay for tax and insurance in respect of payments made to him pursuant to the 2019 Agreement and to acquire and maintain an Australian Business Number, merely reflects the view asserted in the agreement that he is in business on his own account. We therefore reject Deliveroo’s reliance on this provision.

[43] Deliveroo, as earlier set out, sought that considerable weight be placed on clause 2.2, which provides that Mr Franco is not obliged to do any work for Deliveroo and that Deliveroo is not obliged to make any work available to Mr Franco, and on clause 2.4, which provides that Mr Franco may accept or reject any work offered to him when logged into the Deliveroo Rider App. Similar contractual provisions to these constituted one of three matters which caused the Full Bench in Gupta v Portier Pacific Pty Ltd 66 to conclude that a driver who had performed work for Uber Eats did not do so as an employee. This was on the basis that such provisions were indicative of a lack of a control over how long or when the work was performed. However, having regard to the observation in the judgment of the plurality in Personnel Contracting that the right to accept or reject work which is offered may be indicative of casual employment, these aspects of clauses 2.2 and 2.4 cannot be regarded as determinative of the question in this appeal.

[44] Clause 2.2 also provides that Mr Franco is free to work for any other party including competitors of Deliveroo. Again, having regard to the judgment of the plurality in Personnel Contracting, we do not consider this to be determinative because it is not inconsistent with casual employment. Deliveroo emphasised that, in this case, there was an important distinctive feature in that the app technology used by Deliveroo and its competitors which meant that Mr Franco was able to work for Deliveroo and its competitors simultaneously (by delivering meals for two or more different companies in the same vehicle during the same trip), and submitted that this degree of non-exclusivity indicated an independent contractor relationship and that any concept of simultaneous employment was inherently problematic. However, we consider that this submission goes beyond the terms of the 2019 Agreement and impermissibly strays into evidence concerning the actual or potential manner of performance of the agreement. Accordingly, we do not propose to have regard to this submission.

[45] Notwithstanding what we have said about clauses 2.2 and 2.4, it is difficult to reconcile clause 2.3 with any conventionally-understood notion of casual employment. Clause 2.3 provides that it is up to Mr Franco as to whether, when and where he logs in or provides services, and that the Deliveroo Rider App enables him to log in and offer to provide services at any time and in any area where Deliveroo anticipates a need for riders. Casual employment usually operates on the basis that the putative employer, at its discretion, offers work at a particular time and place, and the worker may accept or reject this offer as they please. The employer thus has control over the parameters of the work that is offered. However, clause 2.3 goes somewhat further than this: Mr Franco has the right to elect not only when but where he chooses to work, and Deliveroo may offer work within the parameters thus determined by Mr Franco. This constitutes a reversal of an element of control, albeit limited, which is normally associated with casual employment. We also note that clause 2.5.1 allows Mr Franco, even once he has accepted an order, to subsequently “unassign” himself from the order, in which case he is not obliged to perform it. The objective background facts suggest that this clause is to be construed as meaning that Mr Franco can unassign himself at any time before he actually picks up the food order to be delivered to the customer. Again, it is difficult to identify any analogue of this in normal casual employment. These are matters which weigh to some degree against a finding that Mr Franco was an employee of Deliveroo, but we would we not consider this to be determinative.

[46] There are, however, four aspects of the 2019 Agreement which we consider do weigh decisively in favour of the conclusion that Mr Franco was in an independent contracting relationship with Deliveroo. First, the terms of the 2019 Agreement indicate a lack of control by Deliveroo over the manner of performance of any work which Mr Franco agrees to undertake. Clause 2.5.1 provides that, once an order has been picked up for delivery, it should be delivered within a reasonable time period but that Mr Franco may use any route which he determines to be safe and efficient. The requirement for deliveries to be made within a reasonable time period is typical for independent contracting arrangements in the road transport industry and constitutes a performance standard rather than a right of control. The right which the 2019 Agreement confers on Mr Franco to determine the safe and efficient route to be used to make the delivery clearly indicates that Deliveroo does not have a contractual right to control the mode of performance of the work. To this must be added that clauses 2.1, 3.3 and 4.1 make it clear that Mr Franco has the right to determine what type of vehicle he uses to effect any delivery, and that no particular type of vehicle is required by Deliveroo. As long as safety, reliability and legal requirements governing usage are complied with, Mr Franco is permitted at his own discretion use a bicycle, an e-bicycle, a motorcycle or a car to carry out any delivery. Thus, it is Mr Franco who has control over the mode of performance of the work, not Deliveroo. This, combined with the inability of Deliveroo to require that Mr Franco perform any particular delivery work, means that Deliveroo has even less control under the 2019 Agreement than was the case with the contracts considered in Jamsek.

[47] Mr Franco referred to the requirements upon him under clause 2.5.2 to deal with others professionally when performing delivery services under the 2019 Agreement and to provide the services with due care, skill and ability as demonstrative of a right of control. We do not accept this: such requirements constitute the standards to be met in the performance of services under the 2019 Agreement rather than any power conferred on Deliveroo to control the way in which services are to be performed. Performance standards of this nature are entirely consistent with an independent contracting arrangement. In the 2019 Agreement, Mr Franco has the discretion to determine the means by which services may be performed to the required standard.

[48] Second, Mr Franco is obliged by clause 4.1 to provide, at his expense, the vehicle by which deliveries may be effected. Because the 2019 Agreement allows for this to be something more than just a bicycle, then it is possible (to borrow the language used by Gageler and Gleeson JJ in Jamsek 67) that Mr Franco may provide a “substantial item of mechanical equipment” such that “the personal is overshadowed by the mechanical”.

[49] Third, the 2019 Agreement does not require personal service on the part of Mr Franco. Clause 9 provides that Mr Franco has the right, without the need for prior approval from Deliveroo, to arrange for someone else to perform the services he has contracted to provide. In such a case, Mr Franco has the obligation to ensure that the delegate has the requisite skills and training and to pay the delegate.

[50] Fourth, although the method of remuneration provided for by clause 5.1, by which Mr Franco is entitled to be paid a fee for each completed delivery (that is, he is paid by results, not for time worked), is not necessarily inconsistent with employment, clause 5.3 provides in addition that Mr Franco is required to pay an administrative fee of 4 per cent of the total fees payable to him for access to Deliveroo’s software and for Deliveroo providing invoices and other administrative services. A requirement for the person doing the work to pay a fee of this nature is, we consider, inconsistent with the existence of an employment relationship.

[51] We do not accept Mr Franco’s submission that provisions of the 2019 Agreement that are concerned with safety, compliance with the law or protection against public liability, such as clauses 3, 4.2.1, 4.2.2, 4.2.3 and 6.1.3, are indicative of an employment relationship. These are all provisions that are equally apt to apply in respect of an independent contracting relationship in the road transport industry. 68 Nor do we accept that clause 6.1.4, which allows Deliveroo to use GPS technology to track the performance of deliveries, imposes in terms any right of control over Mr Franco. Clause 6.1.4 expressly states that such tracking technology is for the purpose of allowing customers to track the progress of their deliveries, and there is no basis on the face of the 2019 Agreement to infer that such technology may be used for the purpose of directing Mr Franco as to the performance of his work. Finally, we do not accept that clause 10, which deals with termination of the 2019 Agreement, weighs in favour of Mr Franco’s case; it appears to us to be an entirely unexceptional provision for the termination of a commercial contract.

Realities we are obliged to ignore

[52] In accordance with the approach dictated by the Personnel Contracting decision, we have analysed the question required to be determined in this appeal by reference only to the terms of the 2019 Agreement. Mr Franco’s submissions sought to identify a number of objective background facts which, it was contended, we are permitted to take into account, but it does not appear to us that any of these bear upon the proper construction of the relevant terms of the 2019 Agreement. Mr Franco did not contend that we should infer that the 2019 Agreement was varied as a result of any conduct of the parties after the agreement came into effect; accordingly, this is not a matter to which we have given consideration.

[53] In the circumstances described, the application of the Personnel Contracting decision has obliged us to ignore certain realities concerning way in which the working relationship between Mr Franco and Deliveroo operated in practice. These include the following:

(1) As the Commissioner found, Deliveroo operated the SSB in the period from February 2018 to January 2020. The SSB required riders to book the sessions they would work in advance and provided preferential access to particular sessions based on a rider’s performance as well as incentivising riders not to cancel engagements. The SSB as it operated in practice did not resemble the SSB referred to in clause 2.3 of the 2019 Agreement. In practice, it provided Deliveroo with a significant degree of operational control over its delivery workers, including Mr Franco.

(2) Mr Franco in fact used two motorcycles to perform his delivery work for Deliveroo and discharge his obligations under the 2019 Agreement. He also utilised these motorcycles for personal use. The principal motorcycle which he used cost him about $1,500. Therefore, as the Commissioner found, this did not constitute a substantial capital outlay on Mr Franco’s part. In practice, therefore, this could not be said to be a case where “the personal is overshadowed by the mechanical”.

(3) Mr Franco was, at the commencement of his engagement, strongly encouraged by Deliveroo to use a Deliveroo-branded insulation bag, polo shirt, rain jacket and rain pants in return for a bond of $220 (as the Commissioner found). 69 Mr Franco did this, and used these items whenever he performed Deliveroo business. He thus presented himself to customers as an emanation of the Deliveroo business. The 2017 Agreement provided for a dress code consistent with this, but this was removed from the later agreements.

(4) The 2017 Agreement, although it allowed for delegation with prior approval, established a general rule that Mr Franco was expected to provide services under the agreement personally. This was removed from the later agreements, but it was never commercially practical to delegate the work and Mr Franco never did so.

(5) The various iterations of the contract were drawn up unilaterally by Deliveroo without any negotiation or consultation, and it might be inferred that this was done with an eye to maintaining Deliveroo’s position that the delivery workers were contractors and not employees. Many of the changes in the contract were apparently intended to remove any indication that Deliveroo could control the performance of the work. This occurred against a background in which there was no significant practical change to the way in which the work was conducted apart from the introduction and withdrawal of the SSB.

[54] Had we been permitted to take the above matters into account, as the Commissioner did, we would have reached a different conclusion in this appeal. As a matter of reality, Deliveroo exercised a degree of control over Mr Franco’s performance of the work, Mr Franco presented himself to the world with Deliveroo’s encouragement as part of Deliveroo’s business, his provision of the means of delivery involved no substantial capital outlay, and the relationship was one of personal service. These matters, taken together, would tip the balance in favour of a conclusion that Mr Franco was an employee of Deliveroo. However, as a result of Personnel Contracting, we must close our eyes to these matters.

[55] Mr Franco advanced the alternative submission that the provisions of the 2019 Agreement which gave Mr Franco the right to delegate the performance of the services and which denied Deliveroo a contractual right of control were ineffectual “pretences” or “shams” that must give way to the reality of the working relationship as we have described it above. That submission cannot be accepted because there is simply an insufficient evidentiary basis to conclude that the 2019 Agreement was in whole or part a “sham” according to the well-understood meaning of that expression. In Equuscorp Pty Ltd v Glengallan Investments, 70 the High Court said that “sham” refers to “steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences”. The important point is that the requisite intention must be that of both parties to the ostensible contract, usually if not always with the objective of deceiving a third party.71 Whatever might be said of Deliveroo’s intentions, there is no evidence that Mr Franco entered into the 2019 Agreement intending that it, or significant parts of it, would not have any legal consequences. To the contrary, Mr Franco’s evidence was that he signed the 2019 Agreement because it reduced the administrative fee from 5 per cent to 4 per cent, thus indicating that for his part he intended that it have legal effect.

Conclusion and orders

[56] We conclude 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.

[57] The consequence of this conclusion is that Mr Franco was not a person protected from unfair dismissal within the meaning of s 382 of the FW Act and the Commission had no jurisdiction to entertain his unfair dismissal application nor power to grant him the remedies that it did. The Commissioner’s decision and order must therefore be quashed, and Mr Franco’s unfair dismissal application must be dismissed as incompetent. Regrettably, this leaves Mr Franco with no remedy he can obtain from the Fair Work Commission for what was, plainly in our view, unfair treatment on the part of Deliveroo.

[58] We order as follows:

(1) Permission to appeal is granted.

(2) The appeal is upheld.

(3) The decision ([2021] FWC 2818) and order (PR729921) of Commissioner Cambridge of 18 May 2021 are quashed.

(4) The application in matter U2020/7066 is dismissed.

……………………………………………………………………………………….ATTACHMENT A – the 2019 Agreement

SUPPLIER AGREEMENT

THIS SUPPLIER AGREEMENT is entered into on Thursday 12th December 2019

BETWEEN

  1. Diego Franco (ABN 12 623 301 186) (“You”);…
  2. DELIVEROO AUSTRALIA PTY LTD (ABN 73 607 915 640) of Level 2, 161 Collins Street, Melbourne, Victoria, 3000, Australia (“Deliveroo”)

BACKGROUND

  1. You are a supplier in business on your own account who wishes to arrange the provision of delivery services to Deliveroo subject to the terms and conditions below.
  2. You are free to supply the Services either personally or through someone else engaged by you in accordance with clause 9. For ease of reference, where an obligation involving the provision of Services or the provision of a warranty is set out in this Agreement (and save for clause 2.1, 5, 6.2, 9, 10 or where expressly stated otherwise), “you” should be read as meaning either you personally, or procured by you in relation to any person engaged by you.

IT IS AGREED AS FOLLOWS:

  1. COMMENCEMENT AND DURATION

1.1 This Agreement commences on the date set out above and will continue until it is terminated by either party in accordance with clause 10 below.

  1. SUPPLIER SERVICES

2.1 Deliveroo authorises You to arrange the provision of Services from time to time on the terms set out in this Agreement. “Services” means the collection by you of food, drinks and/or other items (“Order Items”) from restaurants or other partners (“Partners”) notified to you through the Deliveroo rider app (“App”), and the delivery of Order Items by bicycle (including e-bicycles), car or motorbike to Deliveroo’s customers at locations notified to you through the App.

2.2 You are not obliged to do any work for Deliveroo, nor is Deliveroo obliged to make available any work to you. Throughout the term of this Agreement, you are free to work for any other party including competitors of Deliveroo.

2.3 It is entirely up to you whether, when and where you log in and/or perform deliveries. The App enables you to log in and offer to provide Services at any time and in any area where Deliveroo anticipates a need for riders. Deliveroo makes available a self-service booking (“SSB”) tool through the App which can be used to freely login, where Deliveroo has a need for services, or to book sessions when you want to work. Booking in advance using the SSB tool is optional, but if used and a booking is confirmed then you have an assurance that you will be able to log in to provide Services at a particular place and time.

2.4 While logged into the App, you can decide whether to accept or reject any order offered to you and if you do not wish to receive offers of work at any time, you can use the “offline” status.

2.5 When you choose to provide Services, you should:

2.5.1 where you have accepted an order, and unless you choose to un-assign from the order, go to the Partner to collect the Order Items and then deliver the Order Items to the customer. In both instances, you should complete the Services within a reasonable time period, using any route you determine to be safe and efficient; and

2.5.2 be professional in your dealings with Deliveroo staff, other riders, restaurant personnel and members of the public while providing the Services, and provide the Services with due care, skill and ability.

  1. HEALTH & SAFETY

3.1 You are responsible for complying with all applicable work-related health and safety legislation and Deliveroo’s work health and safety guidelines.

3.2 Deliveroo will comply with its responsibilities under all applicable work- related health and safety legislation and will provide appropriate work health and safety materials to you prior to commencement of the supply of Services by you under this Agreement. These materials are available online and you should ensure that any delegate is suitably aware of the content and will comply with it.

3.3 Please inform a member of the Rider Support Team if you or a delegate are involved in any accident or near miss when using your bicycle, car, motorbike, or scooter while supplying Services as soon as possible after the occurrence of the incident.

3.4 If Deliveroo wishes to conduct inquiries in relation to the matters described in this clause 3, you must assist Deliveroo with its reasonable inquiries and promptly cooperate with any requests by Deliveroo for information and documentation.

  1. EQUIPMENT

4.1 You will provide the equipment necessary to provide the Services including your own phone and vehicle.

4.2 While providing the Services, you will:

4.2.1 comply with all applicable legal requirements in relation to the usage of your vehicle, and ensure that it is in a good state of repair and roadworthy;

4.2.2 not use your vehicle while under the influence of drugs or alcohol; and

4.2.3 use food transportation equipment and road safety equipment which meets Deliveroo’s safety standards. Deliveroo’s safety standards, as updated from time to time, will be communicated to you. Equipment which meets Deliveroo’s safety standards can be obtained from Deliveroo.

  1. FEES AND INVOICING

5.1 Deliveroo will pay you a delivery fee (“Delivery Fee”) for each completed delivery. A completed delivery for these purposes is the collection of Order Items from a Partner and delivery to a customer, or the collection of Order Items from one or more Partners and delivery to one or more customers in the case of a stacked order.

5.2 The Delivery Fee offered to you will be communicated by Deliveroo in the App. If you do not wish to accept the order for the Delivery Fee offered, you can reject the order.

5.3 You will pay Deliveroo an administrative fee of 4% (inclusive of any GST payable) of the total fees payable to you for the supply of Services in respect of administrative services provided to you by Deliveroo including:

5.3.1 access to Deliveroo’s proprietary software that allows you to supply the Services; and

5.3.2 administrative services on your behalf, such as providing invoices.

5.4 You will be paid based on an invoice. You can raise invoices for Services provided by you or your delegate in the App, subject to Deliveroo’s invoicing process in place at the time. Deliveroo will then pay your invoice by electronic transfer to your nominated bank account.

5.5 You should keep any tips or gratuities paid to you directly by any of Deliveroo’s customers in respect of Services provided by you under this Agreement.

5.6 As a supplier in business on your own account, you are responsible for accounting for and paying any tax and insurance due in respect of sums payable to you under or in connection with this Agreement. You are required, at your own expense, to acquire and maintain at all times whilst this Agreement remains in operation, an Australian Business Number (“ABN”) and will provide your ABN to Deliveroo on request.

  1. WARRANTIES

6.1 You warrant upon commencement and in respect of any time during which you intend to provide Services that:

6.1.1 you have the right to reside and work in Australia and have all necessary visas, licenses and permits allowing you to do so;

6.1.2 You have no unspent convictions for any criminal offence;

6.1.3 You are proficient in the use of your chosen vehicle and will comply with all legal obligations (including the Road Rules applicable in each State) which apply to you or the provision of the Services from time to time;

6.1.4. You will ensure that, to allow customers to track the progress of deliveries, Deliveroo is able to track using GPS technology the progress of any delivery which you agree to accept.

6.2 You will notify Deliveroo of any driving or other conviction which may impact your ability to provide the Services.

  1. INSURANCE

7.1 Deliveroo offers you insurance which covers specified liabilities to third parties, subject to the terms and conditions of the relevant policy (as in place at the time). While this insurance is provided free of charge, you (and not any delegate) are responsible for any excess fee payable in relation to any claim. You are also responsible for liaising with the insurer in relation to any claims relating to your rider account. We may on occasion disable your access to the App pending provision of such information to the insurer. Deliveroo may deduct such sums from fees payable to you if the excess fee is not paid by you to the insurer. If you provide services using a car or motorbike, you must obtain relevant third party liability insurance which covers you for the business of food delivery throughout any period in respect of which you provide Services. You will, on request, supply Deliveroo with evidence that you had or have up-to-date cover. Any delegate appointed by you need not have their own food delivery insurance as long as they are covered under your insurance.

7.2 Deliveroo also offers you insurance which covers specified injuries and other losses following an accident, subject to the terms and conditions of the relevant policy (as in place at the time).

  1. LIABILITY

8.1 You acknowledge and agree that you (and not any delegate) are responsible for the provision of the Services if and when undertaken, regardless of whether actually delivered by you, and accept liability for any losses suffered by Deliveroo as a result of negligent provision of the Services by you or your delegate.

  1. RIGHT TO APPOINT A DELEGATE

9.1 Deliveroo recognises your right to engage others to provide the Services. You have the right, without the need to obtain Deliveroo’s prior approval, to arrange for another courier to provide the Services (in whole or in part) on your behalf. This can include provision of the Services by others who are employed or engaged directly by you; however, it may not include an individual who has previously had their Supplier Agreement terminated by Deliveroo for a serious or material breach of contract or who (while acting as a delegate, whether for you or a third party) has engaged in conduct which would have provided grounds for such termination had they been a direct party to a Supplier Agreement.

9.2 It is your responsibility to ensure your delegate(s) have the requisite skills and training, and meet the requirements set out in the warranties at clause 6 above. You continue to bear full responsibility for ensuring that all obligations under this Agreement are met. All acts and omissions of the delegate will be treated as though those acts and/or omissions were your own. You are wholly responsible for the payment to or remuneration of any delegate under such terms as you may agree with that delegate and the normal invoicing arrangements as set out in this Agreement between you and Deliveroo will continue to apply. Further information on working with delegates is available on the rider community site, where you can also access the up-to-date onboarding videos and rider materials if you want to show these to your delegate at any time.

  1. TERMINATION

10.1 You may terminate this Agreement with Deliveroo at any time and for any reason on giving Deliveroo immediate notice in writing.

10.2 Subject to 10.3, Deliveroo may terminate this Agreement with you at any time and for any reason but Deliveroo will give you not less than one week’s notice in writing.

10.3 Deliveroo reserves the right to terminate this Agreement with immediate effect in the event of any serious or material breach of any obligation owed by you (including for the avoidance of doubt where such breach is the responsibility of any delegate engaged by you).

  1. DATA PROTECTION

11.1 You must not (unless required to do so by law) use any confidential information of Deliveroo other than as set out in the Agreement and you must only process personal data relating to Deliveroo’s customers (“Customer Data”) in compliance with the following:

11.1.1 you must only process Customer Data as required to provide the Services, including as notified to you through the App;

11.1.2 you must inform Deliveroo as soon as possible of any data breach or if you are not able to provide the Services in compliance with this clause 11 or any applicable law or regulation relating to the processing, privacy, and use of personal data, that applies to you, Deliveroo and/or the Services;

11.1.3 you must put in place and maintain appropriate measures to ensure that your processing of Customer Data is secure, for example, you should maintain password protection on the smartphone that you use to provide the Services and keep your App log-in details and password confidential at all times (except for providing them to a delegate in accordance with this Agreement);

11.1.4. you must ensure that any delegates processing Customer Data on your behalf understand their obligation to keep Customer Data confidential and to treat it in accordance with this clause 11; and

11.1.5. you must never retain any Customer Data after completion of, or unassignment from, an order (unless necessary in order to provide the Services and in accordance with this Agreement) and without unreasonable delay after Deliveroo’s written request at any time, securely delete, return to Deliveroo or remove your access to any Customer Data.

11.2 Deliveroo processes your personal data and the personal data of your delegate(s) as described in the Rider Privacy Policy which can be found at https://rider.deliveroo.com.au/rider-privacy. You are responsible for ensuring that your delegate(s) understand the Rider Privacy Policy and this Agreement before riding with Deliveroo, and in particular that they know that their personal data processed by Deliveroo will be shared with you.

  1. MISCELLANEOUS

12.1 In performing your obligations under the Agreement, you will comply with all applicable anti-slavery and human trafficking laws and/or policies communicated to you.

12.2 At any point when providing or arranging the provision of Services, if you or any delegate has any cause for concern in relation to personal safety or security, please contact the police immediately and notify the Rider Support Team of the relevant facts giving rise to your concern(s).

12.3 No person other than you and Deliveroo may enforce any term of this Agreement (for the avoidance of doubt, this includes any delegate engaged by you in the provision of the Services).

12.4 This Agreement contains the whole agreement between you and Deliveroo. You confirm that you are not entering into the Agreement in reliance upon any oral or written representations made to you by or on behalf of Deliveroo.

12.5 This Agreement is personal to you and may not be assigned to a third party without Deliveroo’s express written agreement (for the avoidance of doubt, this includes any delegate engaged by you in the provision of the Services).

12.6 No waiver by Deliveroo of any breach by you of the Agreement shall be considered as a waiver of any subsequent breach. A waiver of any term of the Agreement shall be effective only if given in writing and signed by Deliveroo. No failure or delay on the part of any party in exercising any right under the Agreement shall operate as a waiver of such right.

12.7 This Agreement is governed by the laws of Victoria and each party to this Agreement submits to the non-exclusive jurisdiction of the courts exercising jurisdiction in Victoria and any courts which have jurisdiction to hear appeals from any of those courts and waives any right to object to any proceedings being brought in those courts.

EXECUTED AS AN AGREEMENT”

Deliveroo Australia Pty Ltd v Franco (2022) FWCFB delivered 17 August 2022 per Hatcher VP, Catanzariti VP and Cross DP