The death of the Bailee/Bailor - the rise of the Employee P2P Driver?

Some 70,000 Australian taxi drivers are about to experience an identity crisis. For the past 30 years we have been brainwashed by the taxi industry mafia into believing that we are self-employed small independent business people, a notion that has been sustained by government regulators captured by the taxi establishment and kept alive by their blind acceptance of the archaic ‘bailee/bailor’ concept. The emergence of booking apps, ridesharing and P2P reforms are rendering the concept obsolete. The Victorian Taxi Services Commission in 2014 renamed its so-called Model Bailment Agreement simply “Driver Agreement” and the NSW Government is in the process of eliminating anything to do with bailees from the NSW Industrial Relations Act. So if we're no longer bailees and bailors, how will taxi and private hire drivers be defined in industrial law?

by Tim Hoi

By the end of next month ‘ridesharing’ will be legal Australia wide, except in the Northern Territory where the government has put a conditional ban on it with a warning to the taxi industry, “lift your game or else”.

The NSW Government created the template for P2P reform, which is being followed by all other states, give or take a few parochial or idiosyncratic tweaks. For example, plate owners in NSW, Queensland and WA will get $20,000 in compensation whilst in SA they will get $30,000; in NSW, SA and WA the so-called ‘reform transition package’ will be financed by a $1 levy on the fares of all modes of point-to-point passenger transport including Uber, whereas in Queensland it will come out of the taxpayers’ pocket (consolidated revenue) whether they use the services or not.

The ‘user pays’ model is obviously the fairest to the public, but that doesn’t make it less idiotic. No government has yet worked out how to collect the hundreds of millions of dollars the surcharge will raise or how to ensure it is not being rorted. We truly are ruled by morons!

And, that brings us to the status of drivers under these new Micky Mouse rules and regulations where control has been transferred from government to the booking services, the primary cause why the bailee/bailor classification has reached its use-by-date. To exist, the taxi mafia needed government regulation to hide behind. For example, it wasn’t your taxi network that demanded you wear its uniform, it was a government regulation introduced in the 90s. Had it been a network-demand the network would have had to pay for the uniforms and it could also have faced a union claim that you were an employee. Only employees can be made to wear a company uniform and only if it is supplied free of charge.

The Fair Work Ombudsman: “Requirement to wear a uniform – employees are commonly required to wear uniforms branded with their employer’s name or logo, whereas contractors cannot be made to wear the uniform of another business because it is inconsistent with the contractor running their own business”.

For the past 20 years all Australian taxi drivers, whether owners or bailees, have been forced by government regulation to wear a network branded uniform and pay for it themselves. Now that this bit of ‘red tape’ has been removed, what now? Board shorts and T-shirts or will the networks fork out to protect their brands?

Uber claims its drivers are independent contractors, a claim which is being challenged in a huge class action by drivers in the US, who claim they are being treated as employees and are demanding compensation for running costs and maintenance. Under a settlement forged in April, Uber agreed to pay up to $US100 million ($130 million) in reimbursement damages to nearly 400,000 drivers. Unfortunately for Uber, earlier this month (August) a US federal judge struck down the proposed settlement as inadequate, potentially continuing the lawsuit that challenges a key tenet of Uber’s business model.

Would a similar claim for employee status by Uber drivers succeed in Australia? Would it for taxi drivers? Hard to say. There is no fixed ‘test’ to decide whether a worker is properly classifiable as an employee or a contractor. However, control, or lack thereof, is one of the primary factors considered by the Fair Work Commission and state Industrial Relations Commissions in determining whether a worker is an employee, independent contractor or … a bailee.

Whether we talk about taxi drivers or ride-share drivers there are only two types that are relevant; owner-drivers and contract drivers e.g. bailees. 99% of UberX drivers are owner-drivers, only 25% of taxi drivers are, the rest of us drive for an owner on some kind of contract. Question is whether it is a contract for labour, of rental (bailment) or both?

In the immortal words of one Owen Ratner, long-time legal brain representing the taxi mafia, “The fact that a taxi cab is bailed to a taxi driver by the taxi owner does not prevent there being a relationship of employer and employee or independent contractor”.

He issued that warning six years ago in a speech at the ATIA National Conference in Darwin and went on to explain how the taxi industry had successfully convinced the courts in almost all cases to rule that taxi drivers are bailees and not employees or independent contractors.

In every case lawyers for the taxi mafia have relied on a ruling made in 1997 by Justice Hill in the Federal Court in a battle between the ATO and Deluxe Red and Yellow Cabs Co-operative (now Cabcharge) where the ATO sought to have taxi drivers classified as employees for the purpose of superannuation. The ATO lost, the mafia won! It’s now 20 years later and contract drivers are still not paid super. Couriers are.

Justice Hill said at the time “Although some control is exercised by the operators over the drivers, that control is only such as is necessary to ensure compliance with legislation concerning taxis rather than such as to signify employment relationship”.

Well, that was in 1997and we are now in 2016, where state transport ministers are busy scrapping much of the legislation Justice Hill relied on. Both Uber and the taxi industry mafia could be up the creek without a paddle if anyone is prepared to challenge the employment status of P2P drivers (taxi, hire and share-ride) in an industrial court.

Officially the Transport Workers Union represents bailee taxi drivers and has since the year dot, not that drivers would know. For the past 30 years it has been largely missing in action leaving the taxi mafia to have its wicked way. Maybe the time has come for TWU National Secretary Tony Sheldon to grab this new opportunity to bolster his union’s rapidly declining membership.

Then, maybe he is too confused to know where to start. Maybe he should have started to take an interest a bit earlier instead of leaving it up to Uber and the taxi mafia to dictate the new P2P rules and regulations. The TWU has been conspicuous by it absence from meetings with transport ministers and their bureaucrats to map out the reforms.

In the new paradigm of digitised P2P transport the chain of command in the taxi industry has become extremely blurred. Who is the boss? With Uber it is quite simple – Uber is. It sets the fare rates, offers the work, collects the payment and pays the drivers, furthermore it doesn’t give ‘destination’ with job offers, preventing its drivers from making an informed decision on whether a job is profitable or convenient. Finally, Uber sets performance parameters by which its drivers are required to operate and uses the threat of deactivation as a management tool. Uber drivers appear to be treated just like employees.

The taxi industry is far more complex especially post-reform. Contract/bailee drivers don’t just have one boss, they have three – the taxi owner, the network and pretty soon ihail, the booking and payment app owned and operated by ihail Pty Ltd, a company majority owned by Cabcharge, Silver Top, Yellow Cabs and Black & White Cabs who together control the Australian taxi industry.

Like Uber, ihail sets the fare rates, offers the work and collects the payment. Unlike Uber through, it doesn’t pay the driver direct, it pays the network, which pays the taxi owner who then pays his driver his share of the spoils. This is the same methodology used by Cabcharge with EFTPOS transactions.

In his 2010 speech Ratner emphasised that to substantiate the relationship between the owner and the driver as one of bailment it was important that the flow of money was from the driver to the owner. The rapid move towards a cashless P2P industry has made that impossible. Today the money generally flows from the owner to the driver.

Ratner also issued another warning: “Only impose conditions on your drivers that are required by law”. This warning applied not only to owners, but also networks or as they are called today – booking services.

Ihail is a booking service and like Uber imposes conditions in its Driver Policy that are not required by law. In its policy document it states: “You must comply with this Driver Policy and any other policy we create as notified to you by your operator from time to time”.

Not only does ihail issue directives to its drivers, but also to their owners. Good old Ratner must be horrified. •

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OZ Cabbie February 2017

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