Australia’s Fair Work Commission ruled today that a Deliveroo rider’s relationship with the food courier was one of employment rather than as an independent contractor in a case that could have a major impact on the country’s gig economy.

Commissioner Ian Cambridge ruled that the rider Diego Franco was unfairly dismissed.

Franco launched the legal action in May 2020, stating at the time that he had not received an email from the company warning him about his performance prior to his termination and he had not been late except when restaurants caused the delay.

In October 2020, the Transport Workers Union, along with Franco, launched the unfair dismissal case against Deliveroo.

In its judgement, the Fair Work Commission stated there was no valid reason for dismissal and cited an absence of procedural fairness and called the dismissal ‘harsh, unjust, and unreasonable’. The Commission also ordered that Franco be reinstated and for lost payments to be restored.

The Fair Work Commission cited the level of control that Deliveroo had over Franco and said it was reflective of the existence of an employment relationship.

“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,” Cambridge stated in the ruling. “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.”

The Fair Work Commission found that Deliveroo regularly reviewed its delivery time records in order to identify any significant delays in the provision of its delivery services to customers. In such reviews Deliveroo initially compares the difference between what it refers to as the expected rider experience time and the actual rider experience time (RET).

Deliveroo’s data analytics software compares the gap between the Average RET and the Actual RET for an individual rider. Deliveroo would compare the times for riders in the same zone using the same type of vehicle and if a rider’s delivery time is considered to be ‘unacceptable’, it would investigate and possibly terminate an agreement. Franco’s average ‘Actual RET’ was found to be between 10 and 30% slower than comparable riders in the relevant zones. Franco was then sent an email warning him about his delayed delivery times.

After an investigation, Deliveroo sent an email advising Franco of his termination.

In the decision, Cambridge stated that “Deliveroo acknowledged that it did not provide any opportunity for Mr Franco to respond or provide any form of explanation in respect of the identified slowness of his delivery times, prior to the email advice of the termination of his supplier agreement.”

“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,” Cambridge stated.

“Following detailed examination of all of the evidence regarding the relevant factors and application of the relevant common law principles, the Commission has determined that the applicant, Mr Franco, was an employee of the respondent, Deliveroo,” Cambridge stated.

A spokeswoman for Deliveroo said “Riders have the absolute freedom to decide whether, when and where they work, and if they do go online they can decide how long to work and can freely reject any offer of work offered to them. Riders don’t need to provide personal service - they can and do use delegates to complete deliveries. Riders can and do work with multiple platforms, including competitors, at the same time - as Mr Franco did himself.”

“We do not accept the premise upon which the decision was taken and do not believe this reflects how Deliveroo riders work with the company in practice,” she said, adding that Deliveroo would “appeal this decision to protect those freedoms”.

Cambridge had previously found a rider at gig company Foodora was not carrying out his own business but was part of the business as an employee.

Elsewhere around the world, Uber lost a landmark legal case earlier this year in the UK Supreme Court and must classify its drivers as workers rather than self-employed. Meanwhile, Spain’s government passed a landmark law earlier this year classifying food delivery riders as employees.

“Although workers in the gig economy are given great flexibility in whether and when they work, the key criteria for employment status  that determines these cases is the amount of control that is exerted over the workers when they are working”, commented Fiona Coombe, SIA’s Director of Legal and Regulatory Research.