Insights + Resources

October 3, 2019

Handle with care: owner drivers get new protections

The Victorian Parliament has passed amendments to the Owner Drivers and Forestry Contractors Act, creating new protections for gig economy workers transporting goods. The move marks a new tack taken by legislators looking to provide regulatory oversight for gig economy workers that remain classified as contractors instead of employees.

Amendments 

The Owner Drivers and Forestry Contractors Act (‘Act’) was originally passed to create obligations on hirers and freight brokers to provide rates and costs schedules to contractors (e.g. in the forestry sector) to assist with income planning.

The amendments to this Act passed on 17 September 2019 significantly broaden the application of the Act. Under the amended Act, a freight broker is “a broker or agent in the business of procuring or arranging the engagement of contractors by hirers, including a person who provides an online platform that facilitates [this]” (emphasis added). This brings any worker who transports “freight” for work under the operation of the Act.

Critically, this includes drivers and bicycle riders operating in the so-called “gig economy” who transport food or other goods for disruptive digital intermediaries (‘DDIs’) like UberEats, Deliveroo, DoorDash and EASI. It does not, however, include drivers who offer ride-sharing services for the carriage of people, engaged by organisations such as Uber, Ola, Bolt or Didi.

The amendments also include the following new requirements designed to benefit drivers:

  • Hirers must pay owner drivers within 30 days of receiving an invoice, unless otherwise agreed.
  • Hirers must provide a minimum termination notice period of one month, or three months for owners of heavy vehicles weighing more than 4.5 tonnes.
  • Hirers must only enter into contracts with owner drivers which specify rates of pay, guaranteed hours of work and the above minimum notice periods in respect of termination.

Remedies for non-compliance

Where hirers fail to comply with the above requirements, owner drivers may take disputes to the Victorian Small Business Commission (‘VSBC’), which can produce binding arbitral determinations.

The amendments have also increased maximum penalties across the board, although the penalty for most offences and contraventions of the Act are still relatively low at 25 penalty units, or $4,130.50. The only exceptions are offences relating to breaching confidentiality and producing false and misleading documents, which go as high as 100 penalty units, or $16,522.

The Employee-Contractor debate

The legal classification of gig economy workers has inspired debate around the world for nearly a decade. These individuals typically provide services for DDIs such as Uber Eats. If these individuals are classified as employees, their employers would be liable to pay employment benefits like workers compensation or notice for termination. If they are classified as contractors, as DDIs argue they should be, workers are not entitled to these benefits. In June 2019, the Fair Work Ombudsman published a report explaining its decision against seeking classification of Uber drivers as employees of Uber Australia, suggesting that gig economy workers are, legally, contractors. However, the Ombudsman’s report is not a binding statement of law and the debate continues both in Australia and overseas jurisdictions like California, which recently passed Assembly Bill 5, creating a more stringent test for contractor relationships.

The amendments to the Act in Victoria give contractors protections that are typical of employment relationships, such as minimum termination notice periods. The amendments are an innovative way of using the existing legal concept of owner drivers to bolster protections for contractor gig workers in Victoria. Although they only apply to contractors who transport “freight”, they extend employee-typical protections such as minimum notice periods for termination.

Broader significance

The amended Act is likely to have growing significance as Australians embrace receiving delivery of products and services through the gig economy. Deloitte’s ‘Future of Food’ report states that online food delivery services generated USD 939 billion in Australia online and predicted this number to continue growing.

More broadly, legislation like the Owner Drivers and Forestry Contractors Act may be extended to include the carriage of people or other categories of gig work. The amendments, which were easily annexed to existing legislation that primarily targeted specialised contractor “transporters”, may be interpreted as the first of a raft of legislative changes. If such a broad legislative regime was to be passed, the impact on workers in Australia would be significant. Uber Australia currently engages approximately 100,000 contractors across its entire business, comprising a sizeable chunk of the Australian workforce.

Concluding remarks

As the employee-contractor debate rages on, the Owner Drivers and Forestry Contractors Act amendments are an innovative way of providing protections to gig workers. For now, the amendments only protect drivers carrying freight in Victoria. Time will tell if similar legislation is proposed that will bring these protections to a broader spectrum of the gig economy workers in Australia.

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