Menulog’s employment trial will challenge the “fiction” that gig economy workers are entrepreneurs

Menulog’s trial to treat its delivery riders as employees could lead to a shift in the way gig economy companies classify their workers, challenging the idea that they’re entrepreneurs themselves.

And, according to one labour law expert, that can’t happen soon enough.

Speaking at Labor’s Senate enquiry into job security on Monday, Menulog managing director Morten Belling reportedly said the company will trial an employment model, offering its delivery workers a full suite of employee entitlements.

“We hope that in a few years time all the workers that are working on the Menulog platform will be employed,” Belling said.

However, he also noted that current modern awards are “not suitable for the industry we’re working in”.

The wind is changing

Speaking to SmartCompany, Dr Shae McCrystal, deputy dean professor of labour law at the University of Sydney Law School, says Menulog may be simply “reading the wind” here.

We have to consider the decision in the context of what’s been happening in this space more broadly, and some of the major developments happening both globally and at home.

In California, legislators are developing the so-called ‘ABC test’ to determine whether a worker should be considered an independent contractor or an employee. That’s expected to classify gig economy workers as employees.

In the UK, the Supreme Court recently ruled that Uber drivers are entitled to worker rights.

And, here in Australia, Uber recently reached an out-of-court settlement with former Uber Eats driver Amita Gupta, who alleged she was unfairly dismissed for a late delivery.

We never heard a judgement, McCrystal notes. But, the transcripts showed members of the federal court were “very sceptical” of the claim Gupta was an entrepreneur, and not an employee.

These three cases represent a shift in regulatory systems around the world, that are “starting to acknowledge the practical reality” that delivery labour does not amount to entrepreneurialism.

Riders and drivers are not working for themselves, generating their own business and finding their own clients, she argues.

They’re “running around in the livery of these companies … and generating revenue for these companies”.

Menulog may well be observing all of this, and getting ahead of it early. And that’s a sensible strategy, McCrystal suggests.

“Industry awards can be flexible and adaptable to the needs of industry,” she notes.

“They can attempt to get on the front foot.”

That means trying to secure an arrangement that gets workers basic rights and reflects Menulog’s needs, too.

An industry under pressure

Whether that means the likes of Uber Eats and Deliveroo will follow suit is a different question.

Historically, McCrystal says these businesses have “steadfastly stuck to the fiction that their business model is one of entrepreneurial self-employment”. At least, until they’ve been forced otherwise.

In a statement, a spokesperson for Deliveroo noted that there is “very little detail about Menulog’s proposal”, and that the pilot will likely take a long time.

Deliveroo’s riders are “at the heart of all that we do”, they said, and surveys conducted by the company show 90% of those riders value flexibility over anything else, the spokesperson said.

They argued that the relationship between Deliveroo and its riders is “fundamentally different” to that between an employer and an employee. There are no set hour or commitments; riders can work for multiple platforms, meaning pay must remain competitive; and they can accept or refuse jobs.

They also noted riders are able to delegate to others, and “many do this in an entrepreneurial spirit”.

The spokesperson said that while Deliveroo would welcome legislative changes that would offer workers more security, the company does not believe the current industrial relations framework allows for this.

That said, if we do see a new award that specifically regulates this industry, McCrystal suggests we will also end up with more case law, as more riders seek to assert their rights.

Awards often work on an industry basis, she notes.

“I suspect this shift will place regulatory pressure on those companies, either socially or because we will start to see a greater number of cases coming through.”

SmartCompany also reached out to Uber Eats. A spokesperson declined to comment having not seen Menulog’s full proposal.

The demise of the gig economy?

When asked whether this is the beginning of the end of the gig economy as we know it, McCrystal says she certainly hopes so.

She wants to see the global players acknowledge that their workers are not small businesses or entrepreneurs. Rather, they’re “at the bottom of the labour market” and they deserve the basic labour law protections that typically come with that.

“It’s not fair that they have the risk shifted to them.”

Late last year, the deaths of five delivery drivers in quick succession raised questions around the safety of gig economy workers, and where the responsibility lies.

In February 2021, WorkSafe NSW released a set of draft guidelines outlining unreasonable delivery times, poorly designed apps, and a lack of familiarity with the roads as key hazards for workers, and placing the onus on the tech providers to address them.

The committee is scheduled to hear statements from workers and small business owners this afternoon.