“Employee-like, it’s hard?” Navigating the new landscape of engaging employee-like workers through digital labour platforms

How we got here

The rise of the gig economy has sparked debate about the rights and protections of gig economy workers around the world. In Australia, digital platform workers have fallen somewhere between traditional employees and independent contractors, but without many of the protections or entitlements afforded to employees.

Globally, this has been addressed in different ways. In the UK, Uber drivers have been found to be ‘workers’, a category similar to employees but with some similar basic entitlements including paid leave and minimum wages. In Spain, ‘rider laws’ have introduced a rebuttable presumption in favour of platform-based workers being employees. In California, Assembly Bill 5 reclassified some independent contractors as employees, to provide those workers with more rights. However, this was overridden by Proposition 22, which carved out app-based transportation and delivery companies from AB5. And while Prop 22 was challenged in the US Supreme Court, it survived that challenge. Like a Facebook relationship status, it’s complicated.

The Albanese Government took to the last election a platform of legislating minimum entitlements for gig workers and those that it described as performing ‘insecure work’. At the start of this year, it passed Closing Loopholes No. 2 amendments to the Fair Work Act, which included significant protections for ‘employee-like’ workers engaged through digital platforms. In this article, we will outline the key changes, and what they mean for digital platforms and businesses engaging workers through those platforms.

These changes have been implemented at the same time as similar changes to the road transport industry, which we wrote about here. 

Key changes

Minimum Safety Net

The new Part 3A-2 of the Fair Work Act gives the FWC the power to establish minimum standards for employee-like workers on digital platforms. These standards may include payment terms, deductions, record-keeping, insurance, and consultation rights. The FWC can make minimum standards orders or guidelines in response to an application, or of its own initiative. If those orders or guidelines are made, employee-like workers will likely be afforded some of the same base level conditions as employees.

While no minimum standards orders or guidelines are in place yet, the Transport Workers’ Union (TWU) has commenced proceedings to seek them. We say more about those proceedings below.

Importantly, any orders or guidelines made in relation to employee-like workers will extend beyond just individuals. The Fair Work Act defines employee-like workers broadly to include individuals operating through a company, trust or partnership, provided they perform all or a significant majority of the work themselves, that they aren’t an employee, and they meet at least two of these conditions: 

That is likely to cover a lot of workers currently performing work through digital platforms.

Unfair Deactivation Claims

From 26 February 2025, eligible regulated employee-like workers will have access to a new ‘unfair dismissal’ style regime through the FWC, if they have been deactivated from a digital platform. ‘Deactivation’ will be where a worker’s access to a platform or app that connects them with job opportunities is terminated, effectively ending their ability to earn income. This changes the goal posts from the historical position, where platforms have exercised unilateral control over when and why workers are deactivated.

If an employee-like worker is deactivated from a digital labour platform after six months of engagement, they may lodge a claim alleging unfair deactivation. The FWC will assess whether:

The FWC has not yet published a Digital Labour Platform Deactivation Code, so keep your eyes peeled for when it does. However, the upshot is this: there will need to be a valid reason for any digital platform deactivations in the future, and a fair process will need to be followed. If a platform fails to do so, it may find itself facing an order to reactivate the worker, and to restore lost pay.

Employee-like worker collective agreements

A new framework now facilitates bargaining for collective agreements between digital labour platform operators and organisations representing employee-like workers. Like Road Transport Collective Agreements (discussed here), the Commission will facilitate the negotiation of an agreement setting minimum terms and conditions of engagement for employee-like workers. 

Unlike traditional enterprise agreements, digital labour platforms and related businesses cannot be compelled to engage in bargaining for a collective agreement. There is also no scheme for protected industrial action available to employee-like workers through the process to add force to their negotiation efforts. And while the Commission can deal with a dispute lodged by a party to the bargaining process, it cannot arbitrate.  That is, it cannot make a determination. 

If a collective agreement is reached, the parties can apply to the FWC for it to be registered.  If a minimum standards order applies to the workers covered, the FWC must ensure that the collective agreement is more beneficial than the applicable standards - similar to the Better Off Overall Test in enterprise bargaining. Upon registration, the collective agreement will set the floor for minimum entitlements required for employee-like workers engaged through that digital platform, and platforms face penalties if they failed to comply.

Unfair Contract Terms

As outlined in our article on the corresponding road transport industry changes (see here), the Fair Work Act now includes its own unfair contract terms (UCT) protections, which could be relevant to services contracts for digital platforms in the gig economy.

In short, the FWC now has jurisdiction to deal with disputes regarding UCT of services contracts, if the contractor earns below the contractor high income threshold (currently $175,000). This may require digital platform providers to review their contracts, and templates, going forward.

twu applications

As mentioned above, the TWU has initiated four sets of proceedings that will impact contractors in the road-transport industry, and employee-like workers engaged through digital platforms.  The two applications likely to have a significant bearing on digital platforms are:

Major platforms like DoorDash, Uber and Menulog have already recorded submissions to the FWC, highlighting the significance of these reforms. Submissions in these cases were open until 27 September 2024, with final recommendations expected from the RTAG by 6 December 2024.