Uber drivers are NOT entitled to receive the minimum wage, annual leave or ANY benefits – because they are not employees, officials rule
- Crushing blow to rideshare drivers who hoped to be ruled as casual employees
- Test case could have forced Uber to pay superannuation and minimum wages
- Drivers are not 'employees' because they have no legal obligation to work
- For every $100 in gross fares, drivers pocket about $19, accountants say
Uber drivers are not entitled to minimum wage, annual leave, sick pay or any benefits as they are not employees, the Fair Work Ombudsman has ruled.
Ombudsman Sandra Parker, said on Friday that the watchdog had completed its investigation into the ride-sharing company.
Her office concluded that the relationship between Uber Australia and the drivers is not actually 'employment'.
The case was viewed as a precedent which could have forced the company to pay its drivers superannuation and minimum wages, driving up their labour costs.
Fair Work Ombudsman Sandra Parker said in a decision published on Friday that Uber drivers are not 'employees' because they have control over whether, when and for how long they work
The Ombudsman had been investigating Uber over claims it engaged in sham contracting by classifying thousands of drivers as independent contractors rather than as employees.
Complaints were lodged by Ride Share Drives United, a drivers' advocacy group, prompting the Ombudsman to investigate whether the drivers should be reclassified as casual employees.
Ms Parker said for an employment relationship to exist, there must be an obligation for an employee to perform work when demanded by the employer.
Transport Workers Union national secretary Michael Kaine called the Fair Work Ombudsman's decision 'devastating for workers in the gig economy'
'Our investigation found that Uber Australia drivers are not subject to any formal or operational obligation to perform work,' Ms Parker said in a statement on the Ombudsman's website.
'Uber Australia drivers have control over whether, when, and for how long they perform work, on any given day or on any given week.'
'Uber Australia does not require drivers to perform work at particular times and this was a key factor in our assessment that the commercial arrangement between the company and the drivers does not amount to an employment relationship,' Ms Parker said.
'As a consequence, the Fair Work Ombudsman will not take compliance action in relation to this matter.'
The ruling comes as a blow to Uber drivers some of whom make very little money while driving for the ride-sharing company.
A report by union-backed Australia Institute's Centre for Future Work released in March 2018 found many Uber drivers earn as little as $15 per hour, or half the minimum wage for transport workers.
Economist Jim Stanford told the ABC's 7.30 report in March last year that drivers only pocket about $7 out of every $20 fare - and that's before income tax.
The rest of it goes on Uber fees, GST or vehicle costs.
Many Uber drivers pocket less than the minimum wage for their work, with most of their fares being spent on car running costs and Uber fees as well as taxes. For every $100 of gross fares, many drivers take home just $19.
'Many Uber drivers don't realise that they're losing about two-thirds of every fare to costs such as the wear and tear on their vehicles,' he said at the time.
Accounting firm DriveTax, which specialises in taxes for delivery and Uber drivers, says on its website that the bulk of fares is taken up by car expenses and Uber fees.
Car expenses take 33 percent of takings, Uber fees 27.5 percent while another 20 percent goes on income tax, GST and other expenses, leaving the driver with just 19 percent of the gross fare as profit.
'If you're in the 21 percent tax bracket then for every $100 of gross fares you'll take home $19,' DriveTax says on its website.
In the United States the situation for Uber drivers is even worse.
A March 2018 working paper working paper by MIT's Center for Energy and Environmental Policy Research found US-based Uber drivers earnt just US$3.37 per hour after costs.
In the wake of the Ombudman's decision, the Transport Workers' Union (TWU) called on the federal government to introduce legislation to prevent gig economy workers from being exploited.
TWU national secretary Michael Kaine called the Fair Work Ombudsman's decision 'devastating for workers in the gig economy'.
'If this is what our laws are guiding regulators to do then these laws are hopelessly broken and the Government must act urgently to put in place rights that protect all workers,' he said in a media release on the TWU website.
Uber said it welcomed the Ombudsman's decision.
'Driver-partners tell us they value the freedom of being their own boss,' Uber's spokesperson told the ABC.
