Fair Work Act 2009

s.604 - Appeal of decisions

Appeal against decision [2021] FWC 2818 of Commissioner Cambridge at Sydney on 18 May 2021 in matter number U2020/7066.

[1] The principal question arising in this appeal is whether Mr Franco, who (to put it as neutrally as possible) formerly performed work in relation to the food delivery system conducted by Deliveroo Australia Pty Ltd (Deliveroo), was an employee of Deliveroo when he did so. Deliveroo has submitted that it would be in the public interest for permission to appeal to be granted in order that this question be determined at the appellate level:

"...the Decision concerns whether a food delivery rider, in what is referred to as the "gig economy", is an employee or contractor, and therefore the appeal "raises issues of importance and wider application"... there is a public interest in having clear legal principles in relation to whether or not a worker in the gig economy is an employee..."

[2] Extensive reference has been made in the parties' submissions to the 2020 decision of a Full Bench of the Commission in Gupta v Portier Pacific Pty Ltd,[1] in which it was determined that a food delivery driver who had performed work in connection with the Uber Eats business had not done so as an employee. The analysis of the plurality in that decision proceeded to a substantial degree on the basis of the principles and case-specific conclusions stated by the High Court in Hollis v Vabu.[2] The plurality also proceeded on the basis that the proper approach, in determining the nature of the relationship between the parties, was to assess the substance and practical reality of the relationship, and at [40] referred to a number of case authorities which stood for that approach:

"More recent decisions of the Federal Court Full Court have elucidated this principle in the context of the identification of whether an employment relationship exists. In ACE Insurance Limited v Trifunovski, Buchanan J (with whom Lander and Robertson JJ agreed) said that "the nature of the relationship may be legitimately examined by reference to the actual way in which work was carried out" ([2013] FCAFC 3, 209 FCR 146 at [91]). In Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd, North and Bromberg JJ (with whom Barker J relevantly agreed) said that: "...appellate courts in Australia and the United Kingdom have been particularly alert, when determining whether a relationship is one of employment, to ensure that form and presentation do not distract the court from identifying the substance of what has been truly agreed. It has been repeatedly emphasised that courts should focus on the real substance, practical reality or true nature of the relationship in question..." ([2015] FCAFC 37 at [142], Barker J agreeing at [316]). And in WorkPac Pty Ltd v Skene the Full Court said "The conduct of the parties to the employment relationship and the real substance, practical reality and true nature of that relationship will need to be assessed" ([2018] FCAFC 131 at [180]).

[3] The hearing of this appeal was conducted on 19 July 2021. At the conclusion of the hearing, we reserved our decision.

[4] On 4 August 2021, the High Court handed down its judgment in Workpac Pty Ltd v Rossato & Ors[3] in which it addressed the question of what constitutes a "firm advance commitment to ongoing work" for the purpose of ascertaining the existence of casual employment under the Fair Work Act 2009 (as it was prior to the amendments introduced by the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Act 2021). In Rossato, the plurality[4] emphasised that the determination of whether the employment in question could be characterised as casual in nature necessarily proceeded upon analysis of the terms of the contract of employment. At [57], the plurality said:

"A court can determine the character of a legal relationship between the parties only by reference to the legal rights and obligations which constitute that relationship. The search for the existence or otherwise of a 'firm advance commitment' must be for enforceable terms, and not unenforceable expectations or understandings that might be said to reflect the manner in which the parties performed their agreement. To the extent that Bromberg J expressed support for the notion that the characterisation exercise should have regard to the entirety of the employment relationship, his Honour erred." (footnote omitted)

[5] The High Court plurality also specifically addressed at [66]-[67] the Federal Court Full Court decision in WorkPac Pty Ltd v Skene, referenced in the passage quoted from Gupta above:

"In light of this discussion, it should now be understood that in approaching the characterisation exercise 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', the Full Court in Skene strayed from the orthodox path.

None of the authorities cited by the Full Court in Skene in support of its approach to the characterisation exercise were cases where the parties had committed the terms of the employment relationship to a written contract and thereafter adhered to those terms. In such a case, it is to those terms that one must look to determine the character of the employment relationship. WorkPac's submission that Skene was wrongly decided in this respect should be accepted." (footnotes omitted)

[6] The plurality also rejected a submission advanced on the basis of Hollis v Vabu that it was necessary to go beyond the express and implied terms of the contract and consider the totality of the relationship of the parties in order to properly characterise the employment in question. At [100]-[101], the plurality said:

"Mr Petersen submitted that WorkPac's contention that the characterisation of Mr Rossato's employment depended entirely on the express or implied terms of the contracts was wrong on two grounds. First, authorities concerning the employee and contractor distinction, including Hollis v Vabu Pty Ltd, consider the 'totality of the relationship' between the parties...

Hollis v Vabu was concerned with whether a person was an employee or an independent contractor of another. On one view, the resolution of that question may depend upon the extent to which it can be shown that one party acts in the business of, and under the control and direction of, the other. It should be borne in mind that the answer to that question affects the rights not only of the parties to the arrangement but also of third parties with whom they deal under its colours. As much is illustrated by Hollis v Vabu itself. There the ultimate issue was whether the appellant enjoyed rights against Vabu or merely against the hapless and impecunious courier. In contrast, the present case is concerned with the character of an employment relationship, a question the resolution of which has no significance for the rights of persons who are not privy to the relationship. 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." (footnotes omitted)

[7] There are currently two appeals before the High Court, for which special leave has been granted, concerning the employee-independent contractor distinction. Matter S27/2021 is an appeal against the Federal Court Full Court decision in Jamsek v ZG Operations Pty Ltd [2020] FCAFC 119, and matter P5/2021 is an appeal against the Full Court decision in CFMMEU v Personnel Contracting Pty Ltd [2020] FCAFC 122. We have been advised that both matters will be heard by the Court on 31 August and 1 September 2021.

[8] It appears to us that Rossato raises a number of question relevant to this appeal, including:

• Is the proposition that "the character of a legal relationship between the parties" must be determined "only by reference to the legal rights and obligations which constitute that relationship" to be read as applicable to the determination of the principal question in this appeal or as confined to an assessment as to whether a particular employment was casual in nature?

• In determining the principal question in this appeal, is it permissible to have regard to the "totality of the relationship" and the "real substance, practical reality and true nature of that relationship", or is our consideration confined to the terms of the contract(s) between the parties?

• In relation to the question whether a person was an employee or independent contractor of another, is the Court's statement that "On one view, the resolution of that question may depend upon the extent to which it can be shown that one party acts in the business of, and under the control and direction of, the other" to be understood as a statement of the existing law? Further, does the expression "[o]n one view" call that into question?

• Is Hollis v Vabu to be regarded as inapplicable to a relationship where "the terms of that relationship are committed comprehensively to the written agreements by which the parties have agreed to be bound"?

• Alternatively, is the question of whether a person performs work as an employee or an independent contractor of a different character to the question of whether an employment relationship is casual in nature, and is to be determined in a different way, because, in the case of the former question, the answer may affect the rights of third parties?

[9] Because Rossato was not specifically concerned with a question of the nature that arises in this appeal, we consider that there is some difficulty in understanding the extent to which it should be applied in this appeal. The answers to the questions above may arguably be determinative of the principal question in this appeal. The High Court's determination of the Jamsek and Personnel Contracting appeals is likely to give authoritative guidance in this respect. In the circumstances, we intend to give consideration as to whether we should defer the determination of this appeal until the Jamsek and Personnel Contracting appeals have been heard and determined.

[10] We propose to list this matter for a further short hearing at 9.00am on Friday 13 August 2021 in order to give the parties the opportunity to address the matters discussed above.

[1] [2020] FWCFB 1698, 296 IR 246

[2] [2001] HCA 44, 207 CLR 21, 106 IR 80

[3] [2021] HCA 23

[4] Kiefel CJ, Keane, Gordon, Edelman, Steward and Gleeson JJ

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