Publication 4 October 2019

More regulation on its way for Victoria’s on-demand economy?

Dugald Murray - Author Headshot

Dugald Murray and Ginni Li

Executive Director - Policy, Trade and Public Affairs at the Victorian Chamber of Commerce and Industry

Victoria’s affair with the on-demand economy may soon come to an end if new heavy-handed regulations are introduced by the Victorian Government. 

Characterised by flexibility, innovation, service integration and responsiveness, the on-demand sector has quickly established in Australia. Its rapid growth and subsequent disruption of conventional markets and the regulatory environment has placed its regulation on the agendas of state and federal governments.

The on-demand sector consists of ridesharing and food delivery services such as Uber, DiDi, and Deliveroo, platforms for hiring freelance workers such as Airtasker, Freelancer and Upwork, as well as more specialised platforms providing professional services.

On-demand economy - courier on like - Half Width

Against this background, the Victorian Government’s Inquiry into the On-Demand Workforce is consulting across government, industry, independent advisory bodies, unions and the community. The Inquiry aims to shed light on the unique regulatory concerns and challenges posed by the on-demand economy. The inquiry has received more than 90 submissions, highlighting the strong business and community interest in the future of the sector.

According to a preliminary survey commissioned as part of the inquiry:

  • 13.1% of adult workers indicated that they have undertaken digital platform work – reflecting a much higher level of participation in the on-demand economy than was previously estimated.
  • On-demand workers are more likely to be younger, low-skilled, have temporary residential status and to speak a language other than English at home. 
  • Platform workers are commonly paid per completed task or job, and typically regard this income as supplementary to their regular earnings. 
  • There is broad spectrum in terms of hourly income, with some workers reporting above $50 for each hour worked and some reporting less than $9.99.
  • The strongest motivators for undertaking on-demand platform work relate to flexibility and choice, while the strongest dissatisfactions have to do with the fees and costs associated with platform use, as well as a lack of training and skills-building opportunities.

The Victorian Chamber has been closely involved with the inquiry, facilitating business roundtables with the inquiry Chair, Natalie James, and highlighting the benefits of the on-demand sector to Victoria’s economy in our own submission. We urged the inquiry to avoid recommending regulatory changes that damage opportunities for on-demand businesses and workers, a key concern that has been consistently articulated by industry stakeholders. 

On-demand industry stakeholders are also concerned about the ill-defined dividing line between ‘employment’ and ‘independent contracting’, arguing that it generates confusion as to the status, rights and entitlements of on-demand workers. In particular, digital platform operators such as Deliveroo and Uber note that the concepts are outdated and poorly applicable to their business models, leaving them unable to extend more secure work arrangements without being pigeon-holed into an employer-employee relationship. From the perspective of doing business, industry submissions highlight the challenge of working with uncoordinated Commonwealth and State regulation, licensing and reporting requirements. Industry emphasises that a uniform approach is needed to minimise red tape for small and multi-jurisdictional businesses. 

Union submissions, in particular those representing workers in industries vulnerable to on-demand transition such as aged care, disability care and higher education, report that the inability to collectively bargain due to commercial competition rules undermines the effectiveness of existing worker protections and precludes on-demand workers from having an organised voice. 

Concerns have also been expressed that:

  • On-demand workers should not be excluded from the coverage of standard employment protections such as minimum wage and health and safety standards.
  • A lack of accountability with regards to data mining, personal information sharing, and the use of monitoring technology increases the potential for exploitation of digital platform workers, customers and other partners.

On-demand economy - food bag delivery - Full Width

Independent advisory bodies and think tanks including the Centre for Future Work and the Black Economy Advisory Board advise that, if left unregulated, the on-demand economy could put downward pressure on wages and conditions, undermining conventional businesses using traditional employment models and driving a race to the bottom on wages, skills and workplace conditions. They warn that this disproportionately affects industries that are vulnerable to insecure work arrangements and vulnerable groups such as low-skilled, migrant and young workers, who have fewer employment options.

A submission from the Fair Work Ombudsman (FWO), Sandra Parker, highlights that the regulator is taking a keen interest in the sector and that that the FWO’s interactions with on-demand workers and businesses to date have predominantly related to ensuring proper classification of workers, as either employees or contractors.

Overall, stakeholders express high hopes for the on-demand sector and its benefit to Victoria’s economy. They raised common concerns regarding legal ambiguity, outdated regulations and protections and the need to better coordinate efforts of federal and state regulation.  

Demonstrating a willingness to respond at the state level, the Victorian Parliament passed the Owner Drivers and Forestry Contractors Amendment Act 2019 in September. The law ensures that drivers who work for on-demand delivery services are covered by an existing regulatory regime requiring drivers to be provided with information booklets, for a hirer to give a minimum period of notice before terminating a driver and providing for dispute resolution by the Victorian Small Business Commission.

Internationally, Californian legislators have also set a new precedent for on-demand regulation, approving a landmark bill that requires on-demand businesses to treat their workers as employees. The bill introduces a statutory definition for the category of ‘employee’, defining it to include any worker whose company exerts control over how they perform tasks or whose work is part of their company’s regular business.This legislative response follows regulatory decisions in New York, Alaska and Oregon which found rideshare drivers to be employees under the law for narrow purposes, as well as tribunal decisions in Britain that found drivers were entitled to minimum wage and vacation.

The inquiry will report to the Victorian Government in late 2019 and it is clear many businesses will be closely watching the Government’s response. We expect that the Government will opt for further regulation of the on-demand sector.We look forward to keeping members updated on developments.