Deliveroo loses unfair dismissal case after rider sacked for being too slow is ruled an employee

Australia’s Fair Work Commission has ruled that a Deliveroo rider was an employee not a contractor in a decision that will have ramifications for the wider gig economy.

Commissioner Ian Cambridge ruled on Tuesday morning that the rider, who was sacked via email for being too slow during the height of the Covid-19 pandemic, was unfairly dismissed and was the subject of “harsh, unjust and unreasonable” treatment.

Deliveroo’s termination system “involved an entirely unjust and unreasonable process,” he said.

Related: Menulog pushes ahead with plans for drivers to become employees under new award

Food delivery companies like Deliveroo or UberEats class their workers as independent contractors, rather than employees, meaning that the delivery riders are not entitled to award rates of pay, sick or annual leave, or protections against unfair dismissal.

But the commission ruled on Tuesday that the worker, a Brazilian national who migrated to Australia, was in fact an employee due to the “level of control that Deliveroo possessed” over him.

Last month, rival food delivery company Menulog said it would move away from the gig economy model and attempt to make all its workers employees within “a few years”.

The rider, Diego Franco, had been working for Deliveroo for three years when he was sacked.

The commission found that Deliveroo regularly tracked its delivery riders and compared their times – known as a “rider experience time” – and used data analytics to identify slow deliverers.

Deliveroo identified Franco’s delivery time as being between 10% and 30% slower than the average delivery time of other riders.

Franco arrived in Australia on Christmas Day in 2016 and began working for Deliveroo four months later in April 2017.

On Tuesday, the Fair Work Commission ruled that this dismissal was “without valid reason”.

“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,” commissioner Cambridge wrote.

He also added that Deliveroo was a global business and “should have” more rigorous procedures.

“Deliveroo is not a small business employer and the size of its enterprise should have enabled it to have adopted far more acceptable and professional employment-related practices and procedures,” he wrote.

The commissioner also found that Franco should be classed as an employee rather than a contractor.

“Following detailed examination of all the evidence … the commission has determined that the applicant, Mr Franco, was an employee of the respondent, Deliveroo,” he wrote.

“The various factors or indicia relevant to the … relationship between Mr Franco and Deliveroo have been carefully examined, evaluated, balanced and considered.

“The correct characterisation of the relationship between Mr Franco and Deliveroo is that of employee and employer … 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.

“The level of control that Deliveroo possessed … when properly comprehended, represented an indicium that strongly supported the existence of employment rather than independent contractor.”

In 2018, the same commissioner made a similar ruling that a worker for the company Foodora was an employee not a contractor, also in an unfair dismissal claim.

Franco also worked for UberEats, after April 2018, in what the commission said was a “supplementary” way.

Related: Sydney delivery riders under pressure to work faster fined by police

Decisions made by the Fair Work Commission can be appealed to the federal court.

In December last year, Uber settled a case before the full bench of the federal court about another unfair dismissal case involving a gig worker – thereby avoiding what would have been a landmark ruling on the status of gig workers.

The Transport Workers’ Union said at the time that it believed Uber settled because the company was facing defeat after a series of critical questions from judges in an earlier court hearing.

On Tuesday, the union’s national secretary, Michael Kaine, said the Deliveroo judgment “has huge implications for gig workers in Australia”.

“We urge the federal government to look at it today and to start devising regulation now,” he said.

“Diego worked hard for Deliveroo for three years and was booted off the app with no warning and over spurious claims that he wasn’t working fast enough. He wasn’t given a chance to argue his case and was left struggling to support his wife and baby daughter.

“The treatment of gig workers isn’t just unfair, it is deadly. Riders work under the spectre that they may get sacked at any moment and are forced to risk their lives to make deliveries quickly.”

Last year, five delivery workers died on the job in Australia in the space of only two months.

A spokeswoman for Deliveroo said it planned to appeal the decision and was “confident that riders are independent contractors”.

“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.

“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.”

The Deliveroo spokeswoman said the company would “appeal this decision to protect those freedoms”.

A spokeswoman for UberEats said that the two apps were different, and Uber did not require its workers to wear a uniform or work set shifts.

Uniforms are not compulsory for Deliveroo workers either, according to today’s Fair Work Commission ruling. The commissioner wrote that they were “encouraged”, but not “required”.

“Not all online food delivery apps operate in the same way,” the Uber Eats spokeswoman said.

The spokeswoman said that the Fair Work Commission and the full bench of the commission have previously ruled that Uber Eats workers are not employees. However, a federal court appeal on the same subject was settled by Uber before a ruling was made.