Ultimate Guide To Diego v Deliveroo: The Evolving Gig Economy

The gig economy has transformed how people work and how businesses deliver services. Food delivery, rideshare and on‑demand platforms have reshaped customer expectations - and the law has been working hard to keep up.

One case sits at the centre of this shift in Australia: Diego Franco v Deliveroo. It has influenced how we think about “employee vs contractor,” and it helped set the scene for the recent “Closing Loopholes” reforms that create new protections for “employee‑like” platform workers.

In this guide, we’ll unpack what happened in Diego v Deliveroo, what it means for your business, and the practical steps you can take to stay compliant as the legal landscape continues to evolve.

What Happened In Diego v Deliveroo?

First, a quick refresher. Diego Franco was a Deliveroo rider who was “deactivated” from the platform. He brought an unfair dismissal claim, arguing he was an employee of Deliveroo and therefore protected by unfair dismissal laws. Deliveroo said he was an independent contractor.

The Initial Decision

In 2021, a Fair Work Commission (FWC) single‑member decision concluded Mr Franco was, in substance, an employee. The Commission placed weight on indicia like Deliveroo’s control over performance standards, ratings and access to work, even though the contract described him as a contractor.

The Appeal And The High Court’s Contract-Centric Approach

In 2022, the Full Bench of the FWC set aside the initial decision, largely because the legal approach had shifted following two High Court decisions handed down earlier that year (Personnel Contracting and Jamsek). The new approach prioritises the terms of the written contract where the contract is comprehensive and not a sham, rather than a broad “multi‑factor” look at the working relationship in practice.

Applying that contract‑as‑written emphasis, the Full Bench concluded that Mr Franco was an independent contractor, so his unfair dismissal claim could not proceed. In short: under then‑current law, the label and rights/obligations in the contract carried significant weight.

Deliveroo subsequently exited Australia in late 2022 for commercial reasons. However, the legal impact of the case lives on - and it directly feeds into the reforms that arrived soon after.

Why Does The Case Matter For Gig Workers And Platforms?

Diego v Deliveroo crystallised a key point: if the written agreement is genuine and sets out clear, contractor‑style rights and obligations (e.g. the ability to work for others, no obligation to accept jobs, control over hours, and the contractor bearing some business risk), Australian courts and tribunals will generally characterise the worker as an independent contractor.

That mattered greatly for platforms. It underpinned a model where businesses contract with gig workers rather than employ them - with different responsibilities for leave, minimum wages, and unfair dismissal protections. At the same time, many gig workers and unions argued that this left significant gaps in protections where workers were economically dependent on platforms.

The broader policy debate that followed set the stage for legislative change. The result: new Fair Work reforms that insert a safety net for “employee‑like” workers on digital platforms, regardless of whether their contracts say “contractor.”

What Changed After Deliveroo? The New “Employee‑Like” Reforms

After Diego v Deliveroo and the High Court’s contract‑centric rulings, Parliament introduced major changes via the Fair Work Legislation Amendment (Closing Loopholes) Acts in 2023-24.

These reforms do not simply re‑label gig workers as employees. Instead, they create a bespoke framework for “employee‑like” workers engaged through digital labour platforms. The Fair Work Commission (FWC) can make minimum standards orders and guidelines that deal with things like payment, working time, record‑keeping, consultation, cost‑recovery, and dispute resolution - while preserving genuine contracting features (like flexibility and entrepreneurship).

Key Features Of The New Framework

• Employee‑Like Coverage: Workers who provide labour through a digital platform and have low bargaining power or a high degree of control exerted over them may fall within scope for “minimum standards,” even if they are contractors.
• Minimum Standards Orders & Guidelines: The FWC can set enforceable floor conditions for covered platform sectors or classes of workers.
• Unfair Deactivation Pathway: A new avenue for review if a worker is de‑listed or suspended from a platform in a way that is harsh, unjust or unreasonable (similar in spirit to unfair dismissal, but adapted to platform work).
• Collective Voice: Stronger mechanisms for platform workers and platforms to make consent‑based collective agreements, supported by the FWC.
• Road Transport Safety Net: Parallel reforms create a similar standard‑setting system for the road transport industry, many of whom also operate via contractor models.

The result is a hybrid system. Contract status still matters - especially for tax, superannuation and many commercial aspects - but there is now an overlay of minimum conditions and dispute processes tailored to platform work. In other words, the “contract first” principle from Diego v Deliveroo still applies, but it’s no longer the end of the story.

Are Gig Workers Employees Or Contractors Now?

It depends on the contract and how the new framework applies in practice. There are two layers to think about.

Layer 1: Common Law Characterisation

Under the post‑2022 approach, you look primarily at the written agreement (as long as it’s genuine and covers the field). Indicators of contracting include the freedom to accept or reject jobs, ability to work for others, supplying your own equipment, bearing some operational costs, and an agreement that frames the worker as running their own small business.

Indicators of employment include obligations to perform work personally under direction, set hours and rosters, performance management in a manner consistent with employees, and an obligation to provide ongoing work in exchange for wages.

If your business engages people to perform services, it’s wise to get tailored employee or contractor advice so you understand where your arrangements sit on this spectrum.

Layer 2: The New Statutory Overlay

Even if a worker is a contractor at common law, the “employee‑like” framework can still apply if they fit within a covered digital platform category. That means a minimum standards order could affect payments, processes and deactivation - and the FWC may have jurisdiction to resolve disputes or set terms in your sector.

So, the right question is no longer just “employee or contractor?” It’s “how will the law treat this engagement across both the common law and the new Fair Work framework?”

How Should Australian Businesses Respond? Practical Steps For Platforms And Hirers

Whether you run a food delivery platform, a marketplace for services, or a logistics platform, now is the time to tighten your legal foundations. Here’s a practical roadmap.

1) Audit Your Engagement Model

• Identify everyone engaged through your platform, the services they provide, and the written contracts in place.
• Check if your sector is likely to be covered by “employee‑like” minimum standards in the near term.
• Map what would change if a standards order applied (e.g. payment practices, dispute handling, record‑keeping).

If in doubt, speaking with online employment lawyers can help you pressure‑test your model against both layers of law.

2) Refresh Your Contracts

Make sure your written agreements reflect genuine contracting features where appropriate, are consistent across your users, and are easy to understand.

• For contractors, use a tailored Contractors Agreement that clearly sets rights and obligations.
• If you employ certain roles (e.g. admin, supervisors), ensure each role has a compliant Employment Contract aligned with the Fair Work system.

It’s also smart to plan for change. Build in review clauses so you can update terms if the FWC makes a minimum standards order affecting your operations.

3) Strengthen Your Platform Terms And Policies

Your user‑facing documentation needs to be consistent with your engagement model. This includes the rules for access, quality expectations, ratings, suspensions and appeal processes. Clear, fair and transparent rules reduce disputes and help you comply with unfair deactivation protections.

• Ensure your Platform Terms and Conditions for workers, customers and merchants are aligned and consistent.
• Publish accessible processes for warnings, temporary suspensions, permanent deactivation and review rights (with reasonable timeframes and evidence standards).
• Train your teams on applying these processes consistently.

4) Get Privacy And Data Practices In Order

Digital platforms process a lot of personal data - identity, GPS location, performance, ratings and complaints. You’ll need a compliant Privacy Policy and an internal framework for collecting, using and retaining data, including how decisions (like deactivations) are informed by that data.

If vendors or software providers process personal information on your behalf, consider a Data Processing Agreement and appropriate security clauses to safeguard information and meet Australian Privacy Act obligations.

5) Review Pay, Deductions And Costs

Minimum standards orders can address payment practices, transparency and certain cost pass‑throughs. Even before an order applies to your sector, it’s best practice to be clear about how fees are calculated, what costs workers bear (e-bikes, fuel, phones), and when deductions may apply.

Transparent documentation helps you comply with any new rules and reduces the risk of disputes over pay.

6) Build Fair Dispute And Deactivation Pathways

The unfair deactivation pathway makes it critical to document objective grounds for suspensions and deactivations, and to offer a fair chance to respond. Set up internal review steps, response timeframes, and escalation options that your team can apply consistently.

Well‑designed processes aren’t just about compliance - they foster trust with your user base and protect your brand.

Key Legal Documents And Policies To Put In Place

The right documents will help you balance flexibility with compliance - and they make it easier to adapt if the FWC issues minimum standards that affect your operations. Consider:

• Contractors Agreement: A tailored agreement with each contractor that defines scope, acceptance of jobs, ability to work for others, payment terms and dispute processes. A clear, well‑structured Contractors Agreement is foundational for platform models.
• Employment Contract: If you have employees in operations, customer support or management, ensure each role has a compliant Employment Contract aligned with the Fair Work Act and any applicable awards.
• Platform Terms And Conditions: Rules for platform access, performance standards, ratings, suspension and deactivation - plus the notice and review pathways that support fairness. Your Platform Terms and Conditions should match your contractor or employment model.
• Terms of Use: If you operate a web or mobile app, ensure your Terms of Use clearly set out acceptable use, IP ownership, liability limits and user responsibilities.
• Privacy Policy: A public‑facing Privacy Policy that explains what data you collect, why you collect it, and how users can access/correct their data - essential for transparency and compliance.
• Data Processing Agreement: Contracts with third‑party providers (e.g. analytics, cloud hosting, support tools) that process personal information on your behalf. A robust Data Processing Agreement helps manage privacy and security risks.
• Internal Policies: Standard operating procedures for complaint handling, incident response, deactivation reviews, and escalation - aligned with any FWC minimum standards that apply to your sector.

Not every business will need every document on day one, but many platforms will need several of these from the outset. If you’re unsure where to start, our team can help prioritise what’s essential now and what can be staged.

Common Pitfalls (And How To Avoid Them)

We often see the same avoidable issues come up as platforms scale. Here’s how to stay ahead:

• Inconsistent Documents: Using different versions of contracts or terms leads to confusion and disputes. Keep a master set, review annually, and version‑control your templates.
• Policy-Contract Misalignment: If your policies say one thing and your contractor agreement says another, the inconsistency can undermine your model. Align them and cross‑reference where helpful.
• Poor Record‑Keeping: If you deactivate a worker, keep the evidence and decision note. You’ll need it if a deactivation review is lodged.
• Opaque Payment Rules: If fees, incentives or deductions are complex, spell them out with examples. Transparency reduces disputes.
• “Set And Forget” Approach: The law is moving quickly. Schedule periodic reviews to check whether new standards or decisions affect your sector.

If your engagement arrangements are complex or evolving, engaging early with employee-contractor advice and targeted contract drafting can save significant time and cost down the track.

Key Takeaways

• Diego v Deliveroo reinforced a contract‑centric approach to classifying workers, but it also helped prompt new “employee‑like” protections for platform workers.
• The Fair Work Commission can now set minimum standards and hear unfair deactivation matters for covered digital platform sectors, even where workers are contractors at common law.
• Businesses should audit their engagement model, refresh contracts, align platform terms and build fair, transparent deactivation and dispute processes.
• Privacy and data practices matter: publish a clear Privacy Policy, regulate processors with a Data Processing Agreement, and document how data informs decisions.
• The right documents - Contractors Agreement, Employment Contract (where applicable), Platform Terms, Terms of Use and internal policies - provide both flexibility and compliance.
• Regular reviews with employment law specialists will help you adapt quickly as new standards or decisions emerge.

If you’d like a consultation on setting up or reviewing your gig‑economy engagement model, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.