Non Standard work and the Gig economy

by Ciaran Strachan

Introduction

The Industrial Relations environment nearly had a heart attack in 2009 when the gig economy first become a mainstream issue fuelled by technological innovation. Since 2009, we have seen several successful court cases where platform owners have successfully defended challenges from contractors that they were employees. The wider Employment Relations field has expanded into the use of Technology as a solution to mitigate other labour law risk including wage-theft, underpayments and unfair dismissal claims.

But is tech contributing towards an increase in precarious employment? Is Non standard work on the rise? What even is non-standard work and how do we define it? I’ll attempt to answer these questions based on research (OMG, Whaaaat), yup, research and not just my opinion.

What is Non Standard work

Due to structural shifts in the economy, the Australian labour market has undergone change over the past 30 years, which include the emergence of service industries as the driving force of the economy and employment growth (Gilfillan, 2018). Between 1988 and 1998, the proportion of employees in casual jobs increased from 19% to 27% (ABS, n.d) and part time rates increased from 11% in 1980 to 17% in 2000 (ABS, n.d). During that time, there has been very strong growth in labour participation for women, and in part time and casual employment, with a decline in permanent full-time employee share of total employment (Gilfillan, 2018). Since the early 2000s, non-permanent employment has somewhat stabilised between to 24 and 25% of Australia’s current working population (Gilfillan, 2018 December) (Gilifillan, 2018 January).

However, the RBA (Reserve Bank of Australia) highlights a statistical concerning upwards trend of part time employment that has steadily increased since 1967 at 9% to 33% in 2017 (Cassidy & Parsons, 2017).

Collectively, non-standard forms of employment include: part-time and casual work, in addition to the more recently seen use of contractors with regards to technological work (Lab & Wooden 2019).

In 2018 the ACTU published “The Rise of Insecure Work in Australia” which best summarises just what unsecure work is…..”The terms insecure work, precarious work and non-standard employment have been used interchangeable in much of the academic literature and policy debates. There is legitimate discussion about exactly what these terms cover. But there is near universal agreement among expert labour statisticians, reputable multilateral and tripartite institutions including the OECD and ILO, as well as among an extremely wide range of governments that these terms include several categories of work.”

The report then goes on to discuss and list the following categories of employment as insecure work:

• Casual,
• Independent Contractors, and
• Part-time.

Misuse of unsecure work in order to reduce labour costs to the employer by classifying full time employees as Casual or Independent Contractors (ACTU, 2018). Employers use multiple short term contracts to ensure workers cannot accumulate benefits (ACTU, 2018). Labour Hire companies create triangular employment relationships; sacking people in standard employment and rehiring the same workers to do exactly the same job, but calling them contractors, or creating an entire sector of casuals that work 38 hour weeks for several years (on 12 month contracts).

A recent example of this where the employer was found to have breached the Fair Work Act and NES was Workpac Vs Skene and Workpac Rossatto.

When interviewed, Adero (representative council for both Skene and Rossatto) stated that Workpac vs Rossatto 2020 was a funded action by Workpac against themselves (personal interview, 3 July, 2020) in order to offset the casual loading against a previous determination (Workpac vs Skene 2018) where another casual employed on a permanent basis was found to be a permanent employee. Adero Law stated that “the total remuneration of the miner in question was roughly 40% less than the equivalent permanent miner working for Rio Tinto, and the 25% casual loading would be used to reduced remuneration owed to 15%.” (personal interview, 3 July, 2020). Both cases were seen as a big win for workers including members of the CFMEU and to “permanent casual” work models (CFMEU, 2020, para 1). In both cases, miners worked 7 on and 7 off rosters, with 12 month contracts, which had been renewed for several years (4 years in total for Rossato).

Although established that the rate paid to Rossato included a casual loading, this was disregarded for the following reasons.

1. The previous case (Workpac vs Skene) concluded on 2016 and that since 2014, Workpac had known it was underpaying permanent employees as casuals, yet continued to do so. And of the 182 payslips paid to Rossato, non showed a casual loading, but a flat rate.
2. There was no evidence produced by Workpac that its mistake was operative (or in other words, a genuine misclassification/calculation).
3. There was no indication that Rossato would have been resistant to a reclassification from casual to permanent (something which many employer groups and state chambers claim is commonplace for casuals, yet evidence says otherwise, including this case).
4. Workpac determined Rossato’s hourly rates, and there is no evidence of negotiation (evidence also supports this is commonplace as casuals are forced to take what they are give, they do not have any power to negotiate).
5. Workpac failed to prove that its mistakes in paying hourly rates that exceed the EBA minimum included a casual loading. In short, they attempted to reverse engineer their payslips to included a casual loading, but failed to support this with evidence, so this didn’t work.

According to AIGroup, this however, is casual double dipping. AIGroup claim that it is common for casuals to work on a regular and systematic basis for existing periods and that Workpac v Skene 2018 may effect the 1.6 million casuals who work on a regular and ongoing basis (AIGroup, 2018, para 1).

However, a 2018 report tabled in parliament titled “Characteristics and use of casual employees in Australia” states the following:

• There are 2.5 million casual employees in Australia.
• Some industries such as hospitality and retail have high concentrations of casuals due to the nature of their work (79%).
• From 1982 to 2016, casuals grew from 13% of all employees to 22% of all employees in 1992 and stabilised at 25% from 1996 to 2016. (Gilfillan, 2018, page 1).
• 19% of casuals work for an employer for a period of greater then 12 months.
• 53% of casuals experience fluctuations of work (or irregular working patterns) which in turn effect their earnings.
• The hospitality and food service industries comprise of 79 and 75% casuals.
• Casual employment is generally sought only by those wanting few hours with other primary responsibilities such as parents or students.

Other forms of precarious employment have also identified such as franchising, in addition to targeting migrant workers have made workers less likely to join a union, or take collective action. This in turn causes workers to accept sub-standard wage practices including wage-theft (Hardy, 2018, November 28). Other examples include cash handback and targeting migrant workers with the threat of deportation (Australian Broadcasting Corporation [ABC], 2015, August 30.

The importance of wages and the brewing crisis in Australia

As of 2018, 47.1% of Australia’s GDP is tied to wages (Stanford, 2018), making wages one of Australia’s highest earner when it comes to GDP. However, this is down from 58.4% in 1975 demonstrating a decrease of 11% since the peak of labour share during that year (Standford,2018). Furthermore, since 2013 the average wages and salaries in Australia have increased at 2% or less, which is the slowest rate of wage growth in Australia since the 1930s (Hardy, 2018, November 28). Experts, including Hardy, Standford and the Governor of the Reserve Bank believe there is a wage crisis brewing in Australia (Hardy, 2018, November 28). All of which, including Professor Andrew Stewart, agree there is not a single solution to such a multi dimensional complex problem (Hardy, 2018, November 28).

And we are continuing to see this trend continue. The Fair Work Commission’s Annual Wage Review 2019-20, released in June this year, announced a minimum wage rise of only 1.4%, despite calls from Unions and other advocacy groups including welfare groups and the Catholic Bishops Society to increase the minimum wage by 4%. It should also be noted that the wage review contained an Australian Bureau of Statistics report projecting a 2% or higher growth in Australia’s GDP during 2021, despite the anticipated impacts of COVID-19.

Unfortunately, this declining rate of wage increases means that the fiscal difference between 1975 and today of 11% or $210 billion after adjustments, means that this difference is not going back into the economy but instead been retained by corporate entities (Stanford, 2018).

Regardless of your political affiliation or political agenda, there is no denying from either labor or liberal that GDP that wages are a considerable source of national GDP, which is in a period of almost unprecedented decline.

Non Standard Work and its relationship to the Gig economy

Standford 2017 best sums up just what a Gig work as ….”Instead of being regular employees, workers will support themselves as flexible, free independent suppliers, moving seamlessly from one job (or “gig”) to another, utilising digital technology to connect with the customers who purchase their respective wares or services.”

Whilst this description sounds attractive and seemingly legit by not falling into the category of precarious work as previously discussed and defined, many cases are starting to emerge where these arrangements are becoming a form of precarious work, better known as sham contracting (Fair Work Ombudsman, N.D). However, this argument is not clear cut and as Standford states, the emphasis here is the drive of obtaining work through technology, also known as digital platform work (Standford, 2017), something which, until relatively recently (2009 onwards), was not even possible until the introduction of smart phones, tablets and phone apps which facilitate such business models in a way which could not be previously managed via non internet connected phones and faxes.

Smart phone tech pre-dates the implementation of the Fair Work Act. A quick internet search will reveal the history of this boom from thousands of sources, starting with the launch of the apple iPhone in 2007, then the launch of apple tablet 2010 (to bridge a market gap between smart phones and laptops) and first phone app boom in which was also in 2010. Yet the Fair Work Act contractor test has largely remained the same since it was drafted during the 2000’s and implemented in 2009, a time which pre-dates the all of aforementioned booms. A time when contractor procurement was still largely complicated and only able to be facilitated via post or fax, and required several often face to face exchanges between the contract manager and contractor before the final contract was signed by both parties and work commenced. Now a phone app can facilitate this process in less than a minute.

Examples of gig platforms still being considered as passing the FWA contractor test include recent unfair dismissal cases by ex Uber Contractors contesting they were employees, yet the FWC dismissed their application as the FWA test concluded they were in fact, contractors (Amita Gupta v Portier Pacific Pty Ltd, 2019). Moreover, this was also concluded by the regulator, the Fair Work Ombudsman who publicly stated in June 2019….”The Fair Work Ombudsman has completed its investigation relating to Uber Australia Pty Ltd and its engagement of drivers……The weight of evidence from our investigation establishes that the relationship between Uber Australia and the drivers is not an employment relationship” (FWO, 2019).

However, gig workers, including Uber Eats delivery drivers are not clear cut contractors, as the FWC did find that some matters lean in favour of “finding employment,” these include: No specific trade or skill, delivery fee was set by Portier Pacific, no means to independently expand their operations and so on (Amita Gupta v Portier Pacific Pty Ltd, 2019).

In July 2020, the first full-scale government inquiry to platform work in Australia, possibly even globally was released (Forsyth 2020). This enquiry picked up several gaps within our current Employment legislative environment, which include:

• Platforms exercise significant levels of discretion and control over gig work and how it is organised.
• There is no independent oversight of these platforms.

Other observations included:

• Arrangements established by the platforms with the workers are usually consciously framed to avoid an employment relationships arising between the worker and the platform.
• Claims by the platforms that gig workers are flexible seeking entrepreneurs was proven to be entirely false, by demonstrating too much control over what the “contractor” can and cannot do, including setting prices for end users.
• Platforms are unapologetic that they have chosen to operate outside the employment regulatory framework.
• Tech platforms are designed to create significant legal barriers to platform workers seeking to improve pay and conditions by organising collectively.

Analysis – The Big Questions

So, what can we conclude? Does precarious work exist and can it be defined? Well yes, we know they consist of several classifications including casual, part time and contractor, and others that don’t quite fit but are a part of the problem such as franchiee’s.

Is precarious employment/insecure work on the rise as claimed by the ACTU and other advocates? Well, in the last 20 years, it could be argued that it has somewhat stabilised at roughly 25%, or 1 in 4 workers. However, prior to that, it was on the rise and has seen boom periods (late 80s to late 90s). But, evidence does suggest that this data only pertains to casual employment. Whilst other forms of precarious employment such as Contractors and Franchiee’s remains scarce, and part time employment, whilst not precarious in nature, but still not full time and defined as insecure work is steadily increasing. Short answer, it is not increasing in some areas (casuals), but is in others (part-time) and in other areas, but we just do not know how much, if at all (contractors and franchisee’s).

Do business models exist that use precarious work models to increase profits by underpaying workers in the form of less entitlements? Well yes.

Are these business models leveraging gig economy technology? Since the Uber ruling by the FWC, and determinations by the FWO, the answer is no………….But the argument is not black and white as the FWC has stated in many cases where boxes are being ticked that contractors are infact employees, unfortunately, there are just not enough boxes being ticked to rule outright that Uber drivers/riders are to be legally classified as employees.

And lastly, the gig economy, is it driving an increase in precarious employment? The simple answer is that gig economy tech does facilitate new growth of contractor work such as deliveries and taxi’s. But does so on platforms that are designed to navigate outside of Australia’s employment regulatory framework by exploiting the current definition of a contractor, in addition to the Fair Work Acts failure to adapt to technological change.

Contrary to much of the misinformation spread by these platforms , there is no evidence to support that “entrepreneurs are seeking to jump from gig to gig”, but rather, much evidence to the contrary. And nor do we have real oversight/regulation of gig tech. But, when looking at the stabilisation of non-permanent workers at roughly 25% between 1998 and 2017, the answer becomes a clear cut no, the gig economy is not increasing precarious employment in Australia. Otherwise between the apple iPhone/Pad/app boom of 2007-10 and now (2020), we would have seen this figure increase, not remain stable. As frustrating as this may seem, the stats just do not support the gig economy, or that tech companies like Uber, Foodora etc, are increasing precarious employment in Australia. Proving that the current issue of precarious employment remains a wider problem than that of the growing gig economy.

Moreover, recent cases such as Workpac vs Skene/Rossatto show large scale business models do exist utilising forms of precarious employment outside of technology, and it could be argued that those leveraging tech such as Uber are simply innovating (Standford, 2017) within the current legal requirements of the Act and its definition of a contractor. What we can safely conclude is that the Act and its definition/test of a contractor which does not allow for technological innovation, especially in the context of the gig economy is a frivolous test.

As Standford 2017 states, “standing in the way of the gig economy is no more feasible than the fruitless efforts of Luddites to stop the steam engine and the spinning jenny.”

References

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Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a Uber Eats 2020 FCAFB 1698 Retrieved from https://www.fwc.gov.au/documents/decisionssigned/html/2020fwcfb1698.htm

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WorkPac Pty Ltd v Rossato 2020 FCAFC 84 Retrieved from https://me.cfmeu.org.au/sites/me.cfmeu.org.au/files/%5B2020%5D%20FCAFC%2084%20WorkPac%20Pty%20Ltd%20v%20Rossato.pdf

December 4, 2020