In a landmark decision, the family of a Hungry Panda delivery rider killed on the job was awarded $834,000 under icare Workers Insurance

What does this mean under the icare Workers Insurance?

Xiaojun Chen died on September 29, 2020, after being hit by a bus while riding his motorcycle in the Sydney suburb of Zetland while working for Hungry Panda. Dede Fredy, a 36-year-old Uber Eats rider, died two days later. Both men lived alone in Australia and supported their families by working as food delivery riders. In Indonesia, Fredy leaves behind a wife and a young son.

A manager at food delivery company Hungry Panda, Luna Wei has told a parliamentary inquiry she did not know they had a legal obligation to report the death of one of their riders to the New South Wales workplace regulator. Whether their drivers are considered an employee or not, under the SafeWork NSW legislation, anyone who has an accident that results in death must report to SafeWork NSW.

More reading on The Importance of ‘Notifiable Incidents’ under the Workers’ Compensation OHS Act

Nick McIntosh, the assistant national secretary of the Transport Workers Union, said:

“It was unjust that both Chen and Fredy were not entitled to the same compensation as other workers. It was “tragic” that both men had so few rights while working in the gig economy to make money for their families and that laws and regulations around gig economy work needed to be strengthened.”

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The Personal Injury Commission issued a report earlier this month. Xiaojun Chen was a worker at the time of his death, according to Employers Mutual Limited and the iCare workers’ compensation scheme. Under the NSW workers’ compensation scheme., the dependents of an employee who dies as a result of a work-related accident are entitled to a lump sum payment of just over $834,000 and weekly payments of $149.30 for each dependant child until they age 16. Chen had two children, a wife, and a father who was 75 years old. Lihong Wei (wife) had also received $20,000 from CTP insurance from the bus driver who hit Xiaojun Chen.

This decision also clears the way for Transport Workers Union lawyers to file a claim with state insurer iCare on behalf of Dede Fredy’s Indonesian-based widow, Nyoman Sunarti, and his four-year-old son, Muhammad, for the same compensation and funeral expenses outlined in NSW workers’ compensation legislation.

More information on “death payments” can be found here.

Jasmina Mackovic, practice group leader at Slater and Gordon who represented the family in the case, said:

“To our knowledge, this is the first case where there has been an admission that a gig economy driver has been considered a worker. Gig economy workers and their families are usually denied any entitlements because they are considered independent contractors rather than employees, meaning they are unable to access workers’ compensation and other benefits, such as annual leave and sick leave.”

What does this mean under the icare Workers Insurance?

Contractor Provision under icare Workers Insurance

Depending on the circumstances, some contractors are also treated as employees for workers’ compensation purposes. This means that if a workplace injury occurs, the contractor may be entitled to workers’ compensation. These contractors are referred to as ‘deemed workers’ by the law. As a result, if the total estimated wages for all of that employer’s NSW workers combined exceed $7500 per fiscal year, their employer (or principal) must declare any payments made as wages and cover them for workers’ compensation.

The full article on “Contractor Provision” can be found here.

A Principal Contractor

A principal contractor is anyone who enters into a contract with another person (subcontractor) to carry out work under workers’ compensation law. If a subcontractor was required to have a policy but did not have one and there is a workplace injury, the principal may be obligated to pay workers’ compensation to workers employed by subcontractors. Furthermore, if a principal contractor fails to ensure that their subcontractors are properly insured, they may be liable for unpaid premiums (this law only applies when a subcontractor is engaged to carry out work relating to the business of the principal).

Definition of “Worker” or “Employee“

“While no uniform definition of worker exists in Australian workers’ compensation schemes, most schemes will consider whether a person is engaged through a contract of service or is an employee for PAYG tax assessment to determine if they are a worker. The definition of the worker can be summarised by jurisdiction, noting that some schemes use the term ’employee,’ while others use the term ‘worker,’ with slightly different definitions of those terms in each scheme.“

Definition of Deemed Worker

“The individual who is deemed to be the worker under a contractual arrangement is referred to as a Deemed Worker. Schemes also differ in terms of the types of workers considered to be deemed workers under the applicable workers’ compensation scheme. It can summarise the definition of a deemed worker by jurisdiction, keeping in mind that all schemes have slightly different definitions. Some jurisdictions consider certain types of contractors to be deemed workers.“

myWorkCover conducted a search on how to become a food delivery driver and found that all food delivery companies such as DoorDash, Uber Eats, Deliveroo and Menu Log stated one thing in common on their websites, the driver is classified as an “independent contractor”.

DoorDash: Become a Driver & Deliver with DoorDash | Alternative To Hourly Jobs

Menu Log: Apply To Be a Delivery Driver / Food Courier on the Menulog Network

Definition of Independent Contractor 

“Any business structure (e.g., an individual, company, partnership, sole trader, trustee) that enters into a contractual arrangement with a hirer for the performance of services is considered an independent contractor. The well-known multi-factor test used by Australian courts is generally applied to determine whether a worker is an independent contractor for workers’ compensation schemes.”

In the multi-factor test, the following factors must be weighed and balanced:

• Is it possible for an employee to set his or her working hours?
• Is it necessary for the worker to provide their tools and equipment?
• How is the employee rewarded?
• Is the employee liable for the cost of repairing or correcting any flaws?
• Is the worker liable for the cost of correcting any flaws or repairing the damage?
• Is the worker required to do the work personally, or can the work be delegated?
• Is the worker given the option of accepting or declining the job?

Except for the requirement of personal service, none of the other factors is conclusive. Instead, when determining the nature of a work contract, the court considers all relevant factors. Despite the fact that control is still an important factor, the High Court has stated:

“It is the totality of the relationship between the parties which must be considered”.

Safe Work Australia Workers’ Compensation Coverage Paper

In simple terms:

• Employees work in your business and are part of the business
• Contractors run their own business and provide services to your business

Related reading: A full article on ‘Contractor Provisions’

What does this mean under the icare Workers Insurance?

Companies like Uber Eats, Menu Log, DoorDash, Hungry Panda and Deliveroo and delivery riders are currently considered “independent contractors” under Australian labour laws, and therefore not entitled to the same benefits as employees.

In the case of Hungry Panda & Uber Eats

In the case of Hungary Panda and Uber Eats, these drivers are not employees because they are not on the payroll and do not meet the definition of a “worker” or “deemed worker” under the current workers’ compensation legislation.

Hungry Panda, Uber Eats and other food delivery companies, as far as I know, send drivers with an order received from a restaurant or takeaway shop via an app, and the drivers then deliver the food to its destination. When customers place an order, Hungry Panda and Uber Eats already receive payments from their participating clients (restaurants and takeaway shops). The money will then be split as a percentage between Hungry Panda and their drivers, and drivers will be paid weekly with their earnings deposited into their nominated bank account. As a result of this arrangement, these drivers are classified as independent contractors and are required to obtain their own workers’ compensation insurance. These drivers will not be covered by the workers’ compensation scheme unless the definition of “Independent Contractor” changes under the workers’ compensation scheme.

The Personal Injury Commission, icare, and Employers Mutual Limited determined and agreed in the case of Xiaojun Chen that Xiaojun Chen was a worker who died as a result of injuries sustained while working for Hungry Panda. Is this a decision that has been subjected to public scrutiny? Or is the Authority thinking about changing the NSW workers’ compensation scheme to include “independent contractors”? Until the workers’ compensation scheme changes its definition of an “independent contractor,” these drivers will continue to be unprotected, and it appears to be a case-by-case review.

An Uber Eats spokesperson told SBS News:

• Uber enables flexible and independent work in a way that hasn’t been possible before. There is no control over a partner’s day-to-day tasks or operations or requirement for partners to report to a manager or boss.
• Having the same rights, obligations and responsibilities as an employer under workers’ compensation legislation are neither practical nor achievable since Uber does not have the same level of control, management or oversight as employers.

The NSW government has formed a task force led by SafeWork and Transport NSW to look into the food delivery industry and whether the recent deaths were the result of “avoidable risks.”

“Every workplace death is a tragedy. Every person who goes to work should come home safely,”

Minister for Better Regulation Kevin Anderson

How to obtain an icare Workers Insurance policy to cover “independent contractors”?

Food delivery drivers and Uber taxi drivers are not covered under the current workers’ compensation scheme in every state. Unless the definition of “independent contractor,” “worker,” or “deemed worker” changes, there is no other option for delivery drivers and Uber taxi drivers. They must form their own companies, appoint themselves as working directors, and be paid a set wage by their employers (their own companies). As a result, in most states, a working director is considered an employee of their own company. Except in Queensland, where contractors and working directors are not covered under the WorkCover Queensland scheme.

Understanding the costs of establishing a company, establishing a workers’ compensation policy, and paying their workers’ compensation premium and public liability insurance for these drivers, the government should consider temporarily subsidising these drivers so that they can be protected under the workers’ compensation scheme.

More information on the icare workers insurance policy

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Disclaimer:

The information in this post is strictly for informational and educational purposes only and should not be construed as legal advice. It is not intended to express specific opinions about specific cases. Before acting on any of the issues discussed in this post, seek additional advice. The information provided should not be relied on for any purpose other than to assist you to understand how Workers’ Compensation insurance works. It is for illustrative purposes only and My WorkCover Solutions Pty Ltd does not accept liability for any loss or damage suffered by any person resulting in any way from the use of or reliance on, the information provided. The information in this article is believed to be correct as of the date of publication. However, changes in the applicable laws may have an impact on the accuracy of the material. This article contains general information that is not tailored to any specific person’s situation. This publication may contain information that relates to the regulation of Workers’ Compensation insurance in your State or Territory. To ensure you comply with your legal obligations, we would recommend you refer to the appropriate legislation as currently in force in the State or Territory you conduct your business. You can find up-to-date legislation by visiting each state’s WorkCover Authority website, alternatively contact myWorkCover for updated information.