Is Deliveroo’s court case the beginning of the end for gig economy companies?

The fortunes of gig economy companies — or what should more accurately be called the exploitation economy — are going from bad to worse.

Yesterday, former Deliveroo rider Diego Franco, backed by the Transport Workers Union, won his unfair dismissal claim against the international company, with Fair Work Commissioner Ian Cambridge explicitly stating that Franco had an employment relationship with Deliveroo, not that of a contractor, and referred to the company’s “callous and perfunctory termination of his services”.

The wave of regulatory pushback against the exploitation industry continues to build around the world. The Spanish government has recently imposed new rules requiring companies to convert “contractors” to employees, following a court ruling last year. In the United States a fortnight ago, Biden administration labor secretary Marty Walsh warned “in a lot of cases gig workers should be classified as employees”, opening the way for the labor department to toughen up regulatory requirements for the likes of Uber, Lyft and DoorDash.

These follow major court decisions in the UK and the Netherlands that found drivers and riders were employees, not contractors.

Only in France has the exploitation industry had a win, with the Paris Court of Appeal confirming in an April judgment that Deliveroo riders were contractors.

Some companies in the industry, like Menulog, are already moving to an employment model, or urging regulators to provide a new model somewhere between contracting and employment. Deliveroo, however, is appealing the Fair Work Commission (FWC) judgment.

The federal government is politically wedged on the issue, having previously lauded the gig economy as wonderful for both companies and workers, only for the surge in deaths of drivers and riders over the last year to shine a spotlight on the dangers of the industry and the lack of effective regulation or basic employment conditions. Its preference until now has been to let the FWC carry the burden of creating a new regulatory framework for the sector, rather than display any leadership.

As the Spanish example demonstrates, governments can take a leadership role in bringing certainty to a dangerous and exploitative industry — and making sure that companies like Menulog that want to do the right thing aren’t forced to compete against the likes of Deliveroo.

This article was first published by Crikey.