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Recent fatal accidents involving food delivery drivers have shone a light on workers’ compensation insurance – or the lack thereof – for gig economy workers.

 

The workers’ compensation insurance conundrum for gig workers

 

Dede Fredy was one of five food delivery drivers killed in Australia between September and December 2020. All five workers were part of the gig economy, working as contractors for Uber Eats, Deliveroo, HungryPanda and other platforms. Another thing they had in common was that none of them were entitled to workers’ compensation. Or were they?

 

In mid-December, legal headlines were made when the Transport Workers’ Union (TWU) filed a workers’ compensation claim with NSW state insurer icare on behalf of Fredy’s widow. The case could be a landmark challenge to existing labour laws, which exclude ‘independent contractors’ from being covered by workers’ compensation insurance.

 

“Most gig economy workers fall into a legal classification akin to independent contractors, not employees. They are usually not covered by mandatory government-regulated workers’ compensation schemes,” stated the Insurance Council of Australia (ICA).

 

“Essentially, if you are not an employee of a company or business, then you are unlikely to be covered by workers’ compensation insurance.”

 

The argument is that when a customer and worker are matched by the intermediary, such as Airtasker, Uber or Freelancer, a separate service contract is created between them, which absolves the gig economy company of any responsibility or involvement with the work that takes place. This means the facilitating companies can classify the workers as independent contractors.

 

Under Australian labour laws, companies are not obligated to pay compensation to ‘independent contractors’ in the event of their injury or death. Uber has a group insurance policy for eligible riders, but the payouts are far less (around half) than the entitlements they could expect to receive under workers’ compensation. The TWU argues that riders and drivers are entitled to the same workplace compensation in the event of death as Uber employees who work in its offices. It may be argued that the worker’s dependence on the gig economy company is akin to that of an employee, not an independent contractor.

 

It is an issue state workers’ compensation regulators, insurers, employers, workers and now lawyers are grappling with. “The lack of workers’ compensation coverage for workers in the gig economy is a gap that should be addressed by state, territory and federal governments,” said the ICA.

 

A research report from the Actuaries Institute noted a nine-fold increase in consumer spending on digital platforms such as Uber, Deliveroo and Airtasker between 2015 and 2019, taking the value of the gig economy to $6.3 billion (with a 32% gain in 2019). This makes insurance issues for workers even more pressing.

 

However, unless and until there is legislation in respect to workers’ compensation for gig economy participants – estimated at up to 7% of working-age Australians or just under one million people – workers will need to arrange their own insurance.

 

According to QBE: “It is a highly complex area, where at the centre sits a person who can be exposed to risks of injury and may not fall under a company’s typical workers’ compensation scheme… it’s incumbent on the insurance industry to design suitable products to provide protection and support for people where statutory and/or government protection isn’t yet afforded.”

 

Gig workers should talk to an EBM Account Manager about the insurance options available – from vehicle/equipment to public liability, life covers to professional indemnity. Without adequate insurance cover, workers and their dependents risk financial ruin in the event something goes wrong.

 

 

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