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The gig economy, also known as the on-demand economy, has evolved drastically over the past decade. A “gig” usually refers to any kind of casual and sporadic work, but it is now more commonly associated with digital platforms that connect workers with jobs.
In 2025, millions of people are part of the gig economy chain – whether as a customer, contractor, employee, investor or anything in between. Airtasker, Freelancer, Uber, Doordash and Deliveroo remain some of the most widely recognised platforms today.
What are the pros and cons of being a gig worker? Are the current laws in Australia providing enough protection for gig workers? This is important to consider, as for many people the gig economy is a primary source of income.
The big tech platform companies have been classifying gig workers as independent contractors in many parts of the world, including Australia, the US and the UK. However, questions have been raised about whether they are actually employees in disguise – a debate that has spurred significant legal developments. If you’re keen to understand your classification in more depth, check out our guide on what is a contractor agreement.
Are Gig Workers Independent Contractors or Employees?
Australia has welcomed the gig economy with open arms, as evidenced by its ever-growing user base. Advocates argue that it empowers individuals to be their own bosses, work when they choose, and avoid rigid workplace structures – indeed, flexibility and autonomy remain the key attractions of gig work.
Over the years, however, there have been concerns about whether gig workers are effectively treated as employees without the benefits that come with a traditional employment contract.
In Australia, the law is not entirely clear on this issue, although recent judgments – including a landmark case in 2023 – appear to lean towards the independent contractor classification. In that case, the Fair Work Commission rejected a claim by Ms Gupta, ruling that she was not an employee of Uber Eats. Nevertheless, opinions within the Commission were divided, with some suggesting that the nature of her engagement more closely resembled an employment relationship.
Regardless, this ruling indicates that gig economy workers associated with Uber Eats are not protected from unfair dismissal. In a subsequent settlement reached in late 2023, Uber Eats resolved similar claims out of court, affirming their stance that their delivery partners are independent contractors.
What Does This Mean?
Experiences of gig workers suggest that, despite the “independent contractor” label, many are more dependent on the platforms than the term implies.
The following are some examples of conditions encountered by gig economy workers:
- Below minimum wage: A survey by the Transport Workers Union in mid-2024 found that food delivery workers earned approximately $12.50 per hour after expenses. This figure is substantially below the current minimum wage, which is around $21.00 per hour in Australia.
- Non-negotiable pay: Recent NSW inquiries have highlighted that delivery rates have been reduced even during periods of high demand. (For further insights, refer to the NSW inquiry discussion paper.)
- Limited safety and no insurance: Between late 2023 and early 2024, several reports emerged of fatalities among bicycle delivery workers. Tragically, the dependants of the deceased were not entitled to any workers’ compensation since such benefits only apply to employees.
But since they are not classified as employees, the Fair Work Act 2009 – the primary legislation governing employer–employee relationships – does not apply.
This means gig workers have no guaranteed income, insurance, or entitlements such as personal or paid leave. Moreover, they are required to provide their own equipment, such as a bike for deliveries, and bear the cost of maintenance, further increasing their financial vulnerability.
The digital platform has no obligation to cover entitlements like workers’ compensation, superannuation or certain taxes. This gap is particularly problematic when financial necessity leads individuals to pursue gig work, yet they are left without the protections that traditional employees enjoy.
What Is Gig Work?
Unions NSW identifies four key characteristics of gig work:
- The work is divided into specific tasks or jobs, and workers are engaged on a task-by-task basis without any guarantee of continuous work.
- The work is performed by individual workers, but may be commissioned by an individual or business.
- The transaction between workers and customers is facilitated by a for-profit company that charges for the service (e.g. Uber). These transactions are conducted via web-based applications that are managed and controlled by the company.
- Workers are classified as independent contractors by the company and are not provided with employment protections or minimum standards.
Uber Eats’ newly proposed contract with its delivery partners, set to take effect from March 2025, also sheds light on how gig workers are viewed on the platform:
- Uber Eats delivery partners are referred to as “Delivery Persons”, not as employees or workers.
- Agreeing to the terms signifies opting to be a “self‐employed contractor”.
- Delivery persons are required to secure their own workers’ compensation and motor vehicle insurance.
- They can be dismissed without notice if their actions result in adverse publicity, media attention, regulatory scrutiny, or other circumstances that might damage Uber’s reputation.
- Payments can be cancelled if a customer lodges a complaint.
As you can see, while the features of gig work are clearly defined, it remains unclear whether the model neatly fits into traditional employment or independent contracting categories.
A Gap In the Law?
Like many rapidly evolving industries, the law has struggled to keep pace with the gig economy. This partly explains why gig workers don’t neatly fall under the independent contractor category, despite often being economically dependent on the platforms.
Nevertheless, both lawmakers and policy makers acknowledge that there is an issue to be addressed. Across Australia, state and federal governments are currently examining whether existing laws are adequate. Initiatives such as the Senate Inquiry into Corporate Avoidance of the Fair Work Act, the Inquiry into the Victorian On-Demand Workforce and recent discussions during NSW inquiries have all highlighted the need for reform. For further guidance on navigating these complex legal frameworks, consider our article on operating as a sole trader.
The Senate Inquiry committee recently recommended that the government amend the Fair Work Act to extend its protections to all workers. Such amendments would grant gig workers access to essential labour standards – including minimum wages and leave entitlements – thereby preventing these arrangements from being misclassified as independent contracting.
The Victorian Inquiry shared a similar view, advocating for enhanced protections for workers in the gig economy. However, the timeline for implementing these changes remains uncertain.
International Examples
Significant legal developments regarding gig work have also taken place internationally.
US: The Legacy of Proposition 22 in California
In the early 2020s, California introduced measures that effectively allowed gig economy companies to classify their workers as independent contractors while offering some limited benefits. Known as Proposition 22, it enabled companies such as Uber, Lyft and Doordash to maintain their business models – albeit with added protections including guaranteed minimum earnings and healthcare subsidies for work performed on the job.
Understandably, the financial implications of this measure for gig economy companies are substantial. These companies invested heavily in advocacy efforts, and a majority of Californian voters ultimately supported Proposition 22, thereby preserving the independent contractor status for gig workers.
Under Proposition 22:
- Drivers are guaranteed at least 120% of the minimum wage on active jobs.
- Healthcare subsidies are provided depending on the number of hours worked per week.
- Vehicle insurance is included as part of the benefits.
- Some protection against discrimination and sexual harassment is offered.
However, these benefits apply only when drivers are actively on the job, and not during idle periods between rides or deliveries.
Proponents argue that reclassifying drivers as employees would undermine the flexibility that attracts people to gig work in the first place. Critics, on the other hand, contend that Proposition 22 is misleading and deprives gig workers of basic employment rights – effectively preserving the current business models at the expense of fair wages for many, particularly within immigrant communities.
For now, however, gig workers in California continue to be classified as independent contractors.
UK: Uber BV v Aslam
Across the pond, a notable case in the UK Employment Tribunal involved drivers working for Uber BV. The drivers claimed that they were entitled to minimum wage and annual leave, arguing that the term “partners” in their contracts was a disguise for establishing an employment relationship. Uber contended that the drivers were self-employed independent contractors and therefore ineligible for such benefits.
Under British law, a “worker” is entitled to certain benefits – including minimum wage and paid leave – even if they do not have full employee status. The Tribunal found that Uber’s contractual language was misleading, ultimately determining that the drivers were indeed “workers” and were therefore entitled to these basic employment benefits.
Uber appealed this decision, but in February 2021 the UK Supreme Court upheld the ruling, firmly affirming that the drivers should be classified as workers under British law.
Implications On Australia’s Gig Economy
Developments such as Proposition 22 and Uber BV v Aslam highlight the divergent approaches to gig work around the world. In Australia, while gig economy platforms continue to classify their workers as independent contractors, there is growing momentum for reform. Unions like the Transport Workers Union, alongside policy makers, are increasingly advocating for extended protections for gig workers. If you’re exploring flexible work arrangements or planning to establish a gig-based business, our guide on operating as a sole trader offers valuable insights into structuring your business effectively.
Up until now, digital platforms have maintained their current practices; however, rising public scrutiny and evolving societal expectations may drive regulatory changes in the near future. For additional guidance on meeting your legal obligations, you might also explore our articles on what regulations affect your corporation and legal advice on starting a business from home.
Looking Ahead
As we move further into 2025, debates over gig worker classification and rights are expected to intensify. Lawmakers, industry stakeholders and unions are exploring innovative approaches to forge a balanced framework – one that preserves the flexibility that attracts people to gig work, while extending essential protections to those who depend on it. Staying informed and seeking professional legal advice is crucial in this evolving landscape. For more insights on regulatory compliance and managing your legal risks, consider our guides on legal requirements for starting a business and understanding business regulations.
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