Working in the gig economy

By Tess McPhail

The rise of platforms like Airbnb, Uber and Airtasker is changing the landscape of the workforce, but are labour and employment laws keeping up?

Online platforms have changed the way we commute, book accommodation, order food and complete everyday tasks.

As Grattan Institute economist Dr Jim Minifie (BA(Hons) 1988, MCom (Eco) 1992) notes, the convenience created by these platforms is unprecedented.

“They reduce transaction and search costs that permit mutually advantageous trades to be done that couldn’t be done before,” Minifie says.

Dr Jim Minifie, the director ofGrattan Institute’s Productivity and Growth Program.
Dr Jim Minifie (BA(Hons) 1988, MCom (Eco) 1992), Grattan Institute economist and the director of Grattan Institute’s Productivity and Growth Program. Image supplied.

However, the ability to regulate online platforms is proving challenging for jurisdictions around the world. In many ways, the law is struggling to keep up with how technology is rapidly transforming the workforce.

With the rise of platform-based work, there have been calls to reform employment law in Australia and overseas to ensure these workers receive adequate protections.

In most cases, people who use these platforms to obtain work are categorised as independent contractors. As a result, they miss out on benefits that employees enjoy, according to MLS employment law expert Dr Tess Hardy (BA 2004, LLB(Hons) 2004, LLM 2008, PhD 2014).

“For a contractor, there is no entitlement to minimum wage, no regulation of working hours and no leave entitlements,” Hardy says.

Dr. Tess Hardy, MLS employment law expert.
MLS employment law expert Dr Tess Hardy (BA 2004, LLB(Hons) 2004, LLM 2008, PhD 2014). Image supplied.

While the operation of these platforms is commonly referred to as the ‘sharing economy’, labour lawyers argue the term ‘gig economy’ or ‘on- demand economy’ more accurately reflects the insecure nature of the work offered.

“The sharing economy implies that there is a sharing of profits,” Hardy says.

“But this is not necessarily the case where the worker is primarily providing labour – as is the case with Uber and Deliveroo.”

The difficulty of regulating these platforms, according to Hardy, is that platform-based work is varied – the working conditions for Uber, Deliveroo and Airtasker are all slightly different.

“Uber is often held up as being the quintessential or stereotypical model of platform-based work, but it is just one model,” says Hardy.

The vast range of platforms, the distinct contractual arrangements and the different working conditions present a challenge for how we should frame the regulatory response because we’re not talking about a homogenous group of workers.

Minifie, the director of Grattan Institute’s Productivity and Growth Program, agrees.

“It is difficult to find a large body of platform-based work that would share sufficient characteristics that you can devise a test to catch all of them,” he says.

While Minifie thinks a ‘watchful waiting’ approach to employment law is best, Hardy is of the view that stronger action is required.

“I do think there is a growing need for a statutory definition of employment,” she says. “What form that takes is the critical question.

I think we should try to craft the law so it not only protects workers in the gig economy, but other workers caught in shady labour hire or sham contracting arrangements, which are common in the cleaning, security, construction and horticultural sectors.

“One of the most straightforward proposals is to introduce an evidentiary presumption that a worker is an employee. It is then up to the principal contractor or employer to disprove that an employment relationship exists.

“Another, more radical step, would be to extend the definition of employment so as to cover a raft of workers that are currently falling between the cracks.”

William M. Kelly, Associate General Counsel of Ofo, a bike-sharing service based in Singapore.
William M Kelly (LLM 2015), Associate General Counsel of Ofo, a bike-sharing service in based in Singapore. Kelly was previously a lawyer for Uber and Airbnb. Image supplied.

William M Kelly (LLM 2015) has first-hand experience working as a lawyer for some of the biggest platforms in the market. He was previously a lawyer for both Uber and Airbnb and is currently working as Associate General Counsel of Ofo, a bike-sharing service based in Singapore.

According to Kelly, the way platforms represent themselves is part of what makes regulating them so  challenging.

“Some sharing economy marketplaces are making reasonably healthy profits but they don’t want to be responsible for the content,” he says.

“Yet these platforms have a lot of funding and can spend heavily on incentives, giveaways and promotions. This directly affects supply and demand on both sides of a marketplace platform.

Playing ‘innocent internet intermediary’ (and not merchant or merchant-agent) when online material is heavily vetted or curated by the platform can seem a little unconvincing.

Part of the problem, according to Minifie, is that many of these platforms do not believe they owe their workers the benefits that traditional employers are obliged to provide.

“Platforms, as tech entrepreneurs, think of the domain they’re creating as absolutely theirs,” he says.

“Because platforms are kind of like regulators themselves, it is not often clear to participants what the limits of the platforms’ rule-making powers are.”

Kelly argues that the law has a role to play when it comes to the safety of workers.

“Policy-makers have to meet legitimate voter demand and they should proactively regulate if they see popular business models taking hold,” he says.

“These business models may need to be placed under close scrutiny. I think a focus on trust and safety, for example, is a policy-maker’s legitimate and proper role.”

According to Hardy, a close examination of business models is crucial.

“I’m not against the gig economy, I think it does fill a niche and provides an amazing new way of finding and providing goods and services,” she says.

“But the impression I get from some of the platform providers is that the business model wouldn’t work if the workers were engaged as employees.

The question then becomes, ‘are you classifying that worker as a contractor to avoid all the additional on-costs associated with employment?’ And if that’s so, does that signal a problem with the law or is it a problem with the business model?

As the demand for online platforms continues to increase, it looks like platform-based work is here to stay.

“Australia has really taken to the sharing economy and is becoming  one of Uber and Airbnb’s strongest markets outside the United States,” Kelly says.

Although Minifie recognises there are challenges the law has not yet  been able to solve, he is of the view that the introduction of these online platforms will have a positive impact on society overall.

“Platforms are just one in a long procession of technological advances that have produced short-term winners and losers but, over time, net aggregate wins” he says.

“Reforms should seek to increase the benefits of such innovations, rather than shut them down.”

Banner image: Platforms like Deliveroo are changing the landscape of the workforce.

Credit: nrqemi/

This article originally appeared in MLS News, Issue 19, May 2018