A story in this morning’s media highlights the vulnerable position of pseudo self-employed “independent” contractors under Australian law:
A Perth-based Uber driver is suing the Silicon Valley giant for terminating him without notice, leaving him with $80,000 worth of car loans – one of which he says was spruiked by Uber.
In what’s believed to be the first case of its kind in Australia, Mike Oze-Igiehon alleges the company breached its contract with him by failing to pass on negative feedback before terminating his account suddenly in November.
Increasing numbers of Australian workers are being effectively forced to operate under such arrangements, with “outsourcing” being the New Black in corporate Australia (large and small) and labour hire companies more numerous than flies around a cowpat.
If Oze-Igieldon had been classified as an employee then termination of his “account” would have been unfair dismissal under the Fair Work Act, and if his loan had been classified as consumer finance he would also have enjoyed additional protections.
The problem is that more and more Australian workers are being forced into faux “independent” contractor arrangements despite in reality only being ordinary workers without skills or resources to survive amidst the swarming piranha of the real business world. What do I mean by “faux” contractor?
Well, whether a worker is an employee or independent contractor in law depends on a multi-factor analysis, including whether the worker supplies their own tools, vehicle and so forth, whether they can lawfully decide what hours and days they work, and whether the “boss” can direct the manner of their work.
But being expected to supply own tools etc is a benefit to the boss and a detriment to the worker. Moreover, workers with substantially only one “boss” or source of work and surviving on a series of short-term contracts or piecework rates have no genuine choice about how and when they work. They do what the “boss” says or they get “sacked”.
Meanwhile the boss avoids award wages, leave entitlements, PAYG tax, unfair dismissal laws etc etc. Australian employment law is completely outdated but neither unions nor the ALP seem to care because the victims aren’t union members. Indeed they may well be aspirational Liberal voters who haven’t worked out they’re being sold down the river and aren’t being presented with a better alternative.
Maybe it’s time to consider extending at least some of the protections of the Fair Work Act and Australian Consumer Law to solo “independent” contractors with no employees. Perhaps any solo worker with only a single contract principal over (say) six months should be deemed at least prima facie to be an employee and entitled to basic award wages, leave entitlements and the like in the industry concerned, as well as protection from unfair dismissal.
Of course, a proposal of that sort would not be without significant difficulties. First, it would probably immediately result in all “independent contractor” arrangements being entered for less than six months (but in fact being successively renewed).
Moreover, it would be difficult if not impossible to calculate weekly working hours in a fair manner where the “contractor” has tendered a lump sum for a job rather than being paid an hourly, daily or weekly piecework rate. Even if there was some workable method of calculating a fair number of hours for a given contracted task to be completed, this would still radically undermine any efficiency effect of such arrangements by removing incentive to complete the task more quickly and efficiently than the norm. Maybe mandating payment of award wages is only feasible for “contractors” paid on piecework rates.
Similar problems potentially arise for workers paid by “splitting the bag” (sales revenue) with the boss or principal. That is effectively how both the taxi industry and Uber usually (though not always) work. Indeed taxi drivers have repeatedly been held (as recently as 2013) to be “bailees” (independent contractors) precisely because they “split the bag” and can at least in theory decide when, where and how hard they work.
I recall that a fixed amount pay-in to the owner was a more common arrangement for casual drivers in the taxi industry when I worked in it many years ago. “Splitting the bag” was reserved for trusted, experienced drivers, otherwise the owner might well regularly be ending up with 3/5 of SFA if the driver either didn’t know what he or she was doing or couldn’t be bothered working very hard.
On the face of it, requiring taxi owners to pay drivers an award hourly wage would be seriously uncommercial. Arguably an owner would have no reliable way of knowing whether a driver’s takings were low because of a series of slow nights or because they were incompetent or a bludger (or both). On the other hand, maybe modern technology makes payment of a wage not as hopelessly impractical as it seems. With a combination of electronic dispatch (which didn’t exist back in the day when I drove cabs) and satellite location tracking of vehicles, it should be possible to allow development of an algorithm that would reliably tell owners whether their drivers are really on the job or sitting at Maccas or a cafe socialising.
But even if that was possible, a requirement to pay award wages to taxi drivers would certainly result in significantly higher taxi fares. I strongly suspect that most taxi drivers at present struggle to make even the adult minimum hourly wage (around $17 per hour) much of the time let alone any relevant award rate. No doubt the same is true of Uber drivers. Apparently Uber itself takes a somewhat smaller share of the bag (about 20%) than the typical taxi owner, but in contrast to taxis the driver has to supply his/her own vehicle and pay all maintenance, rego, insurance, fuel and the like. As one article commented: “If you want to make a living off of Uber, you’re going to have to drive an insane number of hours.”
Do most Australians want taxi (and Uber) drivers to be paid a fair wage, or do we prefer getting cheap fares by turning a blind eye to exploitation of vulnerable workers? Sadly I suspect the latter is probably the case.