hC delivers clarity for independent contractors

Deliveroo Australia Pty Ltd v Diego Franco is a defining case at the intersection of Australia’s expanding gig economy and the legal boundaries of traditional employment protections. At its core was a straightforward yet legally profound question: under the Fair Work Act 2009 (Cth), was a delivery rider engaged via a digital platform an employee with access to statutory unfair dismissal remedies, or an independent contractor operating a commercial service provider?

The answer, delivered through successive decisions of the Fair Work Commission (FWC), turned on how modern working relationships are legally characterised and especially on the role of written contracts in that determination.

Background

The case unfolded against the background of platform-based work becoming ubiquitous in food delivery and ride-hailing, where companies typically label individuals as contractors to avoid employment obligations. The Franco case illustrates the tension between this business model and the policy purpose of the unfair dismissal regime, a protection designed for those in genuine employment, and how legal tests have shifted following recent High Court authority.

Engagement and Termination

Diego Franco was engaged as a delivery rider for Deliveroo Australia from April 2017 to April 2020 under a series of standard “supplier agreements” presented on a take-it-or-leave-it basis. In April 2020, Deliveroo alleged Franco had failed to meet delivery standards, issuing an email terminating his engagement by disabling his access to the rider app. Franco responded by filing an unfair dismissal application with the Fair Work Commission, asserting that he was an employee, not a contractor, and therefore entitled to statutory protection.

The unfair dismissal remedy under the Fair Work Act is only available to employees. Independent contractors do not have access to this protection (nor related remedies like reinstatement or back pay).

The key legal issue at every stage was therefore the characterisation of Franco’s work relationship with Deliveroo: was it employment, or independent contracting?

Phase 1: First Instance — FWC Finds Employment (May 2021)

At first instance, the matter was heard by Fair Work Commissioner Ian Cambridge. Applying the established multifactorial test, which examined both written terms and the practical reality of how Franco performed work, the Commissioner found that:

• Franco was not carrying on a trade or business of his own but was integrated into Deliveroo’s business;

• Deliveroo’s data-driven oversight and ability to influence rider performance were indicative of a significant level of control;

• Franco did not negotiate contractual terms, and the supplier agreement was a contract of adhesion; and

• the termination process was harsh, unjust and unreasonable, not least because Deliveroo did not clearly communicate expected delivery standards before dismissing him.

  
  

On this basis, the Commissioner held that Franco was an employee and that his dismissal was unfair. The FWC ordered reinstatement and back pay.

Deliveroo signalled its intention to appeal, arguing that riders exercise autonomy over when and where they work and can work for other platforms, consistent with formulaic contractor arrangements.

Interim Shift in Law — High Court Authority (2022)

Before the appeal was determined, the High Court of Australia delivered two fundamental judgments in Personnel Contracting Pty Ltd v CFMEU and ZG Operations Australia Pty Ltd v Jamsek, radically recalibrating how worker classification disputes are analysed.

In those cases, the High Court held that where a relationship is governed by a comprehensive, written contract that is not a sham or ineffective, the primary task is to interpret the contract’s terms to determine whether the legal relationship of employment exists. Subsequent conduct or practical realities, once given effect by a valid contract, should not displace clear contractual rights and obligations.

This shift replaced the previously dominant multifactorial inquiry in many contexts, especially where a detailed written agreement set out the entire relationship. The Personnel Contracting and Jamsek authorities therefore greatly curtailed the weight that could be given in litigation to how work actually unfolded in practice — a critical development for gig economy cases.

Phase 2: Full Bench Appeal — Contractual Primacy

On 17 August 2022, the Full Bench of the Fair Work Commission allowed Deliveroo’s appeal in Deliveroo Australia Pty Ltd v Diego Franco (2022) FWCFB 156. Applying the High Court’s approach, the Full Bench held that:

• The supplier agreement comprehensively set out the contractual rights and duties between Franco and Deliveroo;

• Because the contract was valid and complete, the characterisation of the relationship was to be determined primarily from those terms;

• On the agreement’s terms, Franco had autonomy in performing deliveries, provided his own equipment, could reject work, was free to work for others, and paid an administrative fee for access to Deliveroo’s platform — all textual indicators consistent with an independent contractor relationship; and

• The Commission was therefore without jurisdiction to entertain an unfair dismissal claim, as Franco was not an employee at the time of termination.

  
  

The Full Bench candidly acknowledged that, had it been permitted to consider the reality of how Deliveroo exercised operational control over riders, the outcome might have differed but High Court authority required it to confine its analysis to the written contract’s terms.

Outcome and Legal Significance

The appealed decision in Deliveroo v Franco effectively aligned the Commission’s analytical framework with High Court jurisprudence emphasising contractual primacy. As a result, Franco’s unfair dismissal application was dismissed, and he retained no remedy from the Fair Work Commission, despite clear factual findings of unfair treatment at first instance.

The case did not create new law but reinforced the existing principle that, in the presence of a comprehensive written agreement, the focus in worker classification disputes must be on the contract’s terms, not the practical realities of performance. That represents a significant hurdle for gig economy workers seeking access to employee-only statutory protections under the current legal regime.

Broader Context and Continuing Debate

Deliveroo v Franco remains a focal point in discussions about the adequacy of Australia’s labour law frameworks in addressing the realities of platform work. While the Full Bench’s decision is a clear application of judicial authority, it underscores persistent gaps in statutory protections for workers engaged in modern labour market arrangements that sit between traditional employment and independent business services.

As such delivery services continue to emerge and expand in nature, there may be sentiment for policymakers, unions, and commentators calling for legislative reform, including proposals to recognise a category such as “dependent contractor”, or to expand unfair dismissal protections to certain classes of gig economy workers, to ensure that technological innovation is not used to circumvent fundamental workplace rights.

Professional Takeaways

For gig-economy arrangements, Deliveroo v Franco reinforces the critical importance of contractual clarity and alignment with parties’ commercial intentions. It also serves as a reminder that, under current Australian law, the contractual text, not workplace realities alone, often determines access to core statutory protections like unfair dismissal.

For policymakers, the case exemplifies the challenge of applying traditional employment law frameworks to novel labour market phenomena, underscoring the need for careful legislative consideration where statutory classifications fail to reflect contemporary work structures.