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RUBY:

From Schwartz Media, I’m Ruby Jones and this is 7am...

Diego Franco was a food delivery rider. He worked for Uber, Doordash and Deliveroo, to transport food in Australia. What happened to him, and his subsequent case at the Fair Work Commission was supposed to set a powerful precedent for people who work across the whole gig economy – and give workers in these industries the same rights as employees. But instead, his case faltered - and the reason was a High Court decision, that he wasn’t a party to.
Today, journalist and lawyer Kieran Pender, on the story of Diego Franco and how it put the Fair Work Commission at logger-heads with the most powerful court in Australia.

It’s Monday, August 29.

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RUBY:

Kieran, this story begins with a man, Diego, who worked as a food delivery driver until he was fired. Tell me about what happened to him.

KIERAN:

So Diego is from Brazil. He came to Australia on Christmas Day in 2016 and after a few months here he started working for delivery companies. We've had this proliferation of food delivery companies in recent years, on the apps. Your Ubers, your Doordashs, your Deliveroos. And Diego is working mainly for Deliveroo, but really for all of them, using his motorbike to deliver food across Sydney. Then the pandemic hits and at least to begin with, Diego is still working for these companies. But one day early on in the pandemic, Diego got an email from Deliveroo and that changed everything. It was an email about how Deliveroo was collecting data on his delivery performance and it wasn't happy.

RUBY:

Right. Okay. And so how was Deliveroo doing that? How was it assessing his performance using data?

KIERAN:

So we've learnt from subsequent court documents that Deliveroo tracks drivers effectively minute by minute, comparing their speed, their performance, the time it takes for deliveries both to its algorithms, what it thinks it should take, but then also to each other. So how different riders, drivers in different areas are performing, and that has consequences if the algorithms and the company think you're delivering too slow. So you're taking longer than what it thinks it should take to deliver from a restaurant to someone's home. Then that is flagged in the algorithm and it's compared to other drivers and so on. And Diego is told, in effect, that he was too slow and that he was going to be removed from the app.

He did his last shift and then found himself removed, but he wasn't going to take that lying down. So first he'd sort of pleaded with them, asked that they reconsider, they'd said no. And when they didn't relent, he went to the Fair Work Commission with the help of a union, the Transport Workers Union, and applied for an order that he'd been unfairly dismissed. Only Deliveroo said that they couldn't hear that claim because he wasn't an employee.

RUBY:

And that is the heart of this, isn't it? It's about what defines an employee, which is someone who gets benefits, sick leave, annual leave, versus a contractor who in theory, would take on risk in order to, you know, have the freedom or be able to earn more money if they wanted to. And the question is whether that distinction is being applied in a fair way.

KIERAN:

Exactly. So for hundreds of years now, Australian employment law and before that British employment law had this central divide. On one hand, you've got the employees who are working for companies, for employers, and on the other hand you have people who are running their own businesses who are contractors. So when you get a plumber to fix your pipe, you don't employ them. You engage them as a contractor, you pay them a certain amount of money and they worry about everything else. Whereas when you go to work, for most people, they're employed by a company. They get all of these benefits. And for a long time, that division worked. But in the last few decades, we've begun to see the rise of the gig economy, the contractor economy, and the undermining of these employment rights and conditions that are at the heart of our industrial relations compact. And those were issues that were front and centre in this case of Diego versus Deliveroo.

RUBY:

Okay. And so in order for Diego to successfully argue then that he had been unfairly dismissed, he would have had to have proved that he was an employee, not a contractor. So what did the Fair Work Commission find?

KIERAN:

So Commissioner Ian Cambridge from the Fair Work Commission said that Franco was actually an employee and that he'd been unfairly dismissed by the way that Deliveroo had ended his ability to access the app.

Archival Tape – Newsreader

“Food delivery giant Deliveroo has lost a landmark case after one of its former workers was sacked for being too slow. Fair Work ruling the man who was contracted as a rider was actually an employee and subjected to harsh and unreasonable treatment.”

Archival Tape – TWU National Secretary - Michael Kaine

“They're pressured to work, pressured to do those deliveries. They get kicked off the app like Diego was with no recourse. It's unfair. It's unconscionable. And the Fair Work Commission has called it out today.”

Archival Tape – Diego Franco

“Justice was made today and hopefully we will have better conditions for all riders.”

KIERAN:

So (Commissioner) Cambridge looked at the totality of the circumstances. So despite the fact that Franco was on paper an independent contractor, that's what his agreement with Deliveroo said, there were all of these other things that have traditionally pointed towards being a contractor. He could work for other apps as well. He provided his own motorbike. He looked after his tax arrangements and so on. Despite that, Cambridge said, If you look at all of these holistically and you evolve employment law to take into account this new modern digital world, actually he's an employee. So despite the fact, on one hand, he had this sort of superficial flexibility when you dug down, Deliveroo still exercised so much control over Franco and he still wore a uniform. He was presented to the world as part of Deliveroo, not as someone undertaking their own business for Deliveroo. In the end, the commissioner said, actually, that's an employment relationship. And he won.

RUBY:

Right. So Diego won his case. That would have been a huge relief.

KIERAN:

Well, I guess that's where things get interesting. We would have had this really important judgement about how these issues work in this new gig economy age.

Archival Tape – Journalist

“Deliveroo is putting on the brakes, saying it will appeal the decision, arguing that Diego Franco was an independent contractor and so isn't protected from unfair dismissal.”

KIERAN:

Deliveroo appealed. But in the interim, the High Court in two unrelated cases fundamentally reshaped the law, and that put Diego and the Fair Work Commission in a really difficult position.

RUBY:

We’ll be back after this.

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RUBY:

Kieran, we've been talking about this driver, Diego who won an unfair dismissal case against his former employer. It then decides to appeal that decision. And while that is underway something else happens in the High Court which. Which changes things. So can you tell me about what that was?

KIERAN:

In February, the High Court handed down these two decisions: Personnel Contracting and Jamsek. And I actually think we've talked about it before on the show. And these were cases where the High Court rejected the existing approach in employment law, which looked at the practical reality of the relationship. So what's actually happening in the workplace and instead zoomed out to just focus almost exclusively on the legal relationship.

So what's in the contract? Not what's happening on the ground. This was a really black letter approach to employment, given the power imbalance that exists between workers and businesses, and the fact that for decades we've had labour regulation that sought to protect workers. So I spoke to Professor Andrew Stewart from the University of Adelaide and he said that the High Court decision has just wiped out decades of careful judicial development and just insisted that you look at the contract, not anything else.

RUBY:

Okay. And so what do those decisions then mean for Diego's case? Because at this moment in time, he has won the verdict, but he's waiting for the results of this appeal by the company. But in the meantime, there's these other cases that he isn't a party to. They are going on and they're completely changing, I suppose, the landscape in which he's operating in.

KIERAN:

Yeah. So this totally changed the law and that meant that the Fair Work Commission on appeal - these three Fair Work commissioners - they had to decide the appeal based on this new law. And ultimately that meant they had to find for Deliveroo. And they said that actually, under this law, Diego Franco is a contractor, not an employee. And therefore, the Fair Work Commission had no jurisdiction, and they couldn't, despite the fact that they said that the treatment by Deliveroo was unfair, they couldn't give him any legal remedy. But what was really interesting about the decision was how unsubtle the three members of the commission were in their criticism of the High Court. So they had a subheading in the decision that said “realities we're obliged to ignore”. And they said that there were all these facts that would point to Diego being an employee. But as a result of these High Court cases, they, and I quote, “must close our eyes to these matters”. So really condemned the High Court's black letter approach, but ultimately had to, as a matter of law, find in favour of Deliveroo.

RUBY:

Right. So it sounds like the Fair Work Commission is saying, okay, Deliveroo, you can have this, but only because we have to give it to you. Our hands are tied because of these High Court precedents. Essentially, you win this case, but we don't like it and we actually don't think that you should win?

KIERAN:

Yeah. And that's quite a strong reaction from the Fair Work Commission. Obviously, they're much lower in the judicial hierarchy than the High Court, the top court, but on the other hand, are a specialist industrial relations tribunal. This is their bread and butter. The High Court only rarely gets involved in employment law matters. And so for the Fair Work Commission to be criticising the High Court so stridently is unusual and I think really significant.

RUBY:

And so is the suggestion then that the High Court got it wrong with these two cases? That seems to be what the Fair Work Commission is implying.

KIERAN:

Certainly the decision from the Fair Work Commission has elicited a really strong reaction. So I spoke to a number of employment lawyers and employment law academics. One said to me that, you know, the High Court saying we have to close our eyes to reality and that's clearly wrong. Andrew Stewart compared it to the movie The Matrix. You've got these two different worlds, these two parallel universes. One is what the contract says, the other is what happens in real life. But the High Court is saying we've got to take the Matrix version, the one that is this parallel universe that's in the contract, not reality.

RUBY:

And it's clear from what you've been saying that the Fair Work Commission feels that it has no real power here. So is that likely to change? We know that reform to industrial relations is on the new government's agenda - so will we see the commission granted further powers? Legislative change?

KIERAN:

So we've got big reform coming. That's really clear. I spoke to Tony Burke, the Employment and Workplace Relations Minister. He told me that he was really concerned about these developments and that he would soon be giving the Fair Work Commission new powers over the gig economy. Burke said that he wants to modernise employment law. As he said, we want the technology of gig work, but 21st century technology shouldn't come with 19th century working conditions. I guess these on one level might seem like abstract legal issues, but I want to stress that ultimately this is about everyone's day to day workplace, whether you have rights and protections as employees, or whether you lose all of that and you're shifted onto this unstable, insecure work arrangement where as a matter of law, you're running your own business, but you're not really. So it's hard to think, as we evolve as the nature of work evolves, it's hard to think of a more pressing issue than the way we address the technological evolution and ensure that our employment law keeps up.

RUBY:

And so, Kieran, at the end of all of this, Diego lost his case as a result of these precedents that were set. But what would it have meant for him to be treated like an employee by Deliveroo?

KIERAN:

If Diego was an employee and not a contractor, the Fair Work Commission would have had power under existing law to order his reinstatement to the company or to give him compensation for the way he was unfairly treated. So across the two Fair Work Commission decisions, no one denied - all of the commissioners are saying - you've been treated unfairly. They've, through this algorithm, said that you're too slow and then they've just cut you from the app. And that wasn't fair. If he was an employee, and certainly under these powers that are being proposed by the government, the commission would have the power to protect workers in that situation. And so although Diego has lost the battle, he's lost his case. It may be that this decision goes some way to giving the government impetus to winning the wider workplace relations war.

RUBY:

Kieran, thank you so much for your time.

KIERAN:

My pleasure.

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RUBY:

Also in the news today…

The minister who was Scott Morrison’s boss, back when he was the managing director of Tourism Australia has called for him to quit parliament. Fran Bailey, a former Liberal minister, revealed that after Morrison had commissioned Australia’s most expensive tourism campaign: ‘where the bloody hell are you?’ – he refused to answer questions to her or the board of Tourism Australia about how the campaign came about.

And…

Facebook has reached a last-minute settlement in a class-action lawsuit that alleged the company shared the private data of tens of millions of people with other companies, like Cambridge Analytica. Facebook founder Mark Zuckerberg and outgoing chief operating officer, Sheryl Sandberg, were due to give depositions next month, but if the settlement is approved – they will no longer have to give evidence under oath.

I’m Ruby Jones - this is 7am - see you tomorrow.

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