By Fiona Waring

With the rise of digital labour platforms in recent years, the regulation of the workers operating on these platforms (often referred to as “gig-economy” workers) has become a contentious issue in Australia.

Gig-economy work often involves workers completing certain “on demand” tasks for consumers via digital labour platforms, such as ride share services or food delivery services.

Until now, Australian gig-economy workers have been classified as either independent contractors or employees. Employees and independent contractors have different rights and responsibilities and their working conditions are subject to differing levels of regulation.

Many gig-economy workers do not clearly fit into either classification, which has led to growing calls for reform to improve certainty and regulation for gig-economy workers as to their rights and protections.

In February 2024, the Federal Parliament passed the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth), which introduces amendments to the Fair Work Act 2009 (Cth) (Fair Work Act) that will, among other things, regulate the working conditions of specific kinds of workers including many gig-economy workers and certain contractors in the road transport industry.

The Fair Work Act amendments affecting gig-economy workers will come into effect by 26 August 2024 (or an earlier date determined by proclamation) and will:

• introduce a new class of worker in Australia, “employee-like workers”, which will cover many (but not all) gig-economy workers that would otherwise have been classified as independent contractors;
• empower the Fair Work Commission (FWC) to introduce minimum standards for employee-like workers;
• provide a consent-based collective agreement framework for employee-like workers; and
• introduce protections for employee-like workers from unfair deactivation by digital labour platform operators (Platform Operators).

These new amendments will not apply to gig-economy workers who are genuine employees or genuine independent contractors who do not fall within the definition of “employee-like worker”.

What is an employee-like worker?

A worker will be an “employee-like worker” under the new amendments if they meet five requirements: [1]

• The first requirement is that the person is a prescribed individual performing work under a services contract[2].
• The second requirement is that the worker must perform all or a significant majority of the work that is to be performed under the services contract.
• The third requirement is that the work performed under the services contract is digital platform work.

Digital platform work will include work performed by an independent contractor through a digital labour platform under a services contract, where payment is made for that work.[3]

• The fourth requirement is that the worker does not perform any work under the services contract as an employee.
• The fifth requirement is that the worker satisfies at least 2 of the following:
• they have low bargaining power in negotiations in relation to the services contract under which their work is performed;
• they receive remuneration at or below the rate of an employee performing comparable work;
• they have a low degree of authority over the performance of their work;
• they have other characteristics prescribed by the regulations.

Minimum Standards 

The new amendments will provide the FWC with the power to set minimum standards for employee-like workers through binding minimum standards orders[4] or non-binding minimum standards guidelines.[5]

Minimum standards orders may include terms about payment, deductions, certain record-keeping matters, insurance, consultation, representation, delegates’ rights and cost recovery.[6]

Civil penalties can apply for contravention of an applicable minimum standards order.[7]

Collective Agreements

Platform Operators and unions representing the interests of employee-like workers will also be empowered to negotiate and make collective agreements in relation to certain employee-like workers.[8]

Among other things, these collective agreements can provide for terms and conditions on which employee-like workers covered by the agreement, will perform their digital platform work.[9]

Unfair Deactivation

Under the new amendments, employee-like workers will be protected from “unfair deactivation” from the digital labour platform they perform work through, if they meet certain criteria.[10]

“Deactivation” of an employee-like worker from a digital labour platform will include where the worker can no longer perform their work on the platform, because the Platform Operator has modified, suspended or terminated their access to the platform.[11]

Eligible deactivated workers may apply to the FWC within 21 days of deactivation to challenge the decision.[12]

To determine whether an employee-like worker was unfairly deactivated, the FWC will consider:[13]

• whether the deactivation was inconsistent with the Digital Labour Platform Deactivation Code (the Code);[14] and
• whether the deactivation was unfair, taking into account factors including whether there was a valid reason for the deactivation, and whether relevant processes in the Code were followed.

The FWC will have the power to order that an unfairly deactivated worker be “reactivated” by a Platform Operator.[15] In certain circumstances, the FWC will also be able to make orders for the restoration of a reactivated worker’s lost pay.[16]

Next steps

In light of the increased regulation in the gig-economy from 26 August 2024, Platform Operators will need to consider whether:

• any workers the Platform Operator engages or will engage are likely to be employee-like workers; and
• the Platform Operator needs to adjust its contracts, policies and/or work practices to ensure compliance with the new regulatory framework for employee-like workers including in relation to deactivation processes and any applicable minimum standards.

If you have any queries about how these changes will affect you or your business, please contact HLS Legal on (08) 9322 5202.

This article is intended to be informative only and does not constitute legal advice. If you are concerned about your individual circumstances, please contact a lawyer.

[1] Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) (Loopholes 2 Act), Schedule 1, Part 16; Amended version of Fair Work Act 2009 (Cth), as will be in effect by 26 August 2024 (Amended FW Act), s 15P.

[2] “Services Contract” will be defined in section 15H of the Amended FW Act.

[3] Amended FW Act, s 15N.

[4] Amended FW Act, s 536JY(1).

[5] Amended FW Act, s 536KR.

[6] Amended FW Act s 536KL.

[7] Amended FW Act s 536JB. A person will only contravene a minimum standards order if that order applies to the person – see Amended FW Act s 536JC.

[8] Amended FW Act, s 536MK(1).

[9] Amended FW Act, s 536MK(2).

[10] Amended FW Act, s 536LD.

[11] Amended FW Act, s 536LG.

[12] Amended FW Act, s 536LU.

[13] Amended FW Act, s 536LF; s 536LH.

[14] The final Digital Labour Platform Deactivation Code is yet to be released as at the date of this article.

[15] Amended FW Act, s 536LQ.

[16] Amended FW Act, s 536LQ(3).