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23 August 2017

Company leasing car to Uber driver found to be an ‘employer’ for the purposes of workers’ compensation

Transport companies enter into a variety of contractual arrangements with drivers. In many cases, it can be difficult to determine whether a particular driver is an employee or a subcontractor. Just because the driver is called a subcontractor does not mean they actually are one.

Transport companies enter into a variety of contractual arrangements with drivers. In many cases, it can be difficult to determine whether a particular driver is an employee or a subcontractor. Just because the driver is called a subcontractor does not mean they actually are one. In the recent decision of Pirot Pty Ltd v Return to Work SA (Schultz) [2017] SAET 92, the South Australian Employment Tribunal found that a driver performing chauffeur work using a car he leased from Blue Ribbon was actually an employee of Blue Ribbon and not a subcontractor as alleged by Blue Ribbon.

Pirot Pty Ltd, trading as Blue Ribbon Passenger Services, leased vehicles to driver, Joshua Schultz. There were effectively two parts to Mr Schultz’s work:

  • He performed private chauffeuring work for Blue Ribbon.
  • When he was not performing private jobs for Blue Ribbon, he performed work for Uber, using Blue Ribbon’s vehicle.

Importantly, in relation to the second part of his work, Mr Schultz would pay 50% of the income from Uber work to Blue Ribbon as a vehicle lease fee. Mr Schultz’s association with Uber began at Blue Ribbon’s direction, with the company director assisting him to set up his Uber profile.

In the course of his work as a driver, Mr Schultz injured his lower back while lifting a heavy case out of the boot of a vehicle owned by Blue Ribbon. It is unclear from the judgment whether, at that exact time, he was undertaking a private job for Blue Ribbon or an Uber job.

Return to Work SA accepted Mr Schultz’s claim for workers’ compensation on the basis that his injuries occurred during his employment with Blue Ribbon. Blue Ribbon challenged this decision, arguing Mr Schultz was not a ‘worker’ for the purposes of the South Australian Workers’ Rehabilitation and Compensation Act 1986.

The issue to be determined by the Tribunal was whether Mr Schultz was an employee of Blue Ribbon. The Tribunal applied the well-known ‘totality of the relationship’ test from Hollis v Vabu (2001) 207 CLR 21.

Factors weighing against the existence of an employment relationship included that:

  • Mr Schultz paid for the majority of the fuel and cleaned the vehicle at his own expense.
  • He had no leave or superannuation entitlements.
  • He operated under his own ABN, collecting and remitting his own GST.

However, factors weighing in favour of the existence of an employment relationship included that:

  • Mr Schultz operated strictly within the systems set down by Blue Ribbon. He was told which vehicle to drive, allocated jobs that were booked through Blue Ribbon directly and instructed to otherwise be available for work through Uber. He completed Blue Ribbon worksheets and wore the standard of dress dictated by Blue Ribbon (including a Blue Ribbon badge).
  • Where customer payments were made by EFTPOS, he was paid by Blue Ribbon rather than the customer.
  • He did not have his own business structure, such as independent advertisement or promotion of his services.

The Tribunal concluded that, on balance, there was an employment relationship, as ‘Mr Schultz was providing little more than his labour’.

While by no means new law, this ‘new age’ decision is yet another example of the Hollis v Vabu ‘totality test’, which requires careful consideration of the whole of the relationship and all of the relevant factors.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.

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