“John” was rushing along Swanston St, through the bustling afternoon crowds, to purchase his next order. Turning into Chinatown, then into a mall, he reached his destination: CoCo Fresh Tea and Juice.

To deliver the order, he wandered into a glitzy apartment complex, caught an elevator with scenic views over the street, and arrived at the apartment. After sorting out payment, John (not his real name) was off down the street to pick his next delivery assignment.

Melbourne Delivery Service – just one of many newly formed businesses of the gig economy – is the city’s major Chinese-Australian food delivery service. While its clients may be happy, it delivers mixed outcomes to its employees.

There are now hundreds of people, from several countries in Asia, working for the company

In the CBD in particular the trademark yellow and black cyclists have become the norm.

The “gig economy” has been around for decades, and the legal classifications for contractors and employees are close to a century old. 

In recent years technology has allowed the gig economy to take new forms. Food delivery companies such as Uber Eats, Deliveroo, and Melbourne Delivery are just a few examples.

Xingyu, a Chinese student at RMIT, drives for Melbourne Delivery because it pays better than his previous work as a waiter in a Chinese restaurant.

“I think it’s [good], because you get the salary immediately when you send [the food] to the customer home,” he says.

But not everyone is happy with the system.

Melbourne Delivery driver “Sarah” (not her real name) came from China to study. She says work allocation is not fair at the company.

“A delivery staff[er] who is good with the customer service staff will get more jobs and pay but the others are just waiting to be given a job order.

“It’s a little bit unfair because we need to pay the same rental for the bike but we received very few jobs,” Sarah says.

David, another delivery driver from China, says it’s unfair and that the system should automatically allocate orders to delivery drivers. He has also found the pay rate to be inadequate.

“Some people we are working one hour [and] maybe have $15, $19. One day we [earn] about $120, $120 to $130. But we want to work about 13 to 14 hours. Maybe one hour just $10, not enough,” he said.

Driver Sarah also believes she is underpaid.

“The problem is there are too many delivery staffs and I hardly get $80 per day even if I work for 12 hours a day,” she says.

A common cause of underpayment is disagreements about how workers are classified.

In Australian law, there are two broad categories of worker, the employee and the contractor. The employee has many work rights, while the contractor does not.

Contractors can be split again into independent and dependent contractors, while the dependent contractor is quite similar to an employee, causing ambiguity and confusion.

The description of workers as contractors rather than employees has been challenged by a recent ruling by the Fair Work Commission, which found that Foodora “contractor” Joshua Klooger was an employee. The company was ordered to pay $15,559 for his unfair dismissal.

The Fair Work Commission concluded that the relationship between Foodora and Klooger was an employer/employee, despite the fact Mr Klooger signed an Independent Contractor Agreement with Foodora in 2016. 

Transport Workers Union National Assistant Secretary Nick McIntosh says while Mr Klooger’s case is unique, it doesn’t mean that workers from other companies won’t be found to be employees as well.

“There are just certain technical parts of the Foodora business that make him more likely to be an employee than, say, someone who works for Deliveroo or UberEats or any of these other apps,” he says.

“In this particular case we thought it was legally more likely that Josh would be an employee.”

Foodora recently pulled out of Australia after facing legal proceedings against it by FWO for potential breach of law over sham contracting.

Ms McAlary-Smith says that although businesses deliberately disguise contracts in order to avoid liability, any agreement would be judged according to practical outcomes and not the contract alone. 

“Any court and [the FWO] will also look at the reality of the arrangement in practice.”

A Federal Senate Inquiry last year recommended changes be made to the Fair Work Act (FWA) to protect against sham contracting.

Under the proposed changes, dependent and on-demand contracting would be covered by legislation, allowing workers to receive minimum wages, and other minimum work standards.

Mr McIntosh says delivery drivers for companies such as Melbourne Delivery should have more protections in place. 

In the gig economy, workers are subject to a ranking system in the applications, so that when a worker takes a break from a regular shift, they lose their ranking in that list, he says. This shows that drivers don’t have genuine flexibility over when they work, and that the platform actually has control over work allocation.

In contrast, Mr McIntosh says, real subcontractors have much more control, despite the claims to flexible work-hours in the gig economy.

“It’s the rights, not the label, that matters.”

Mr McIntosh advocates for a federal regulatory system, similar to that already established in NSW.

“What we need is a specialist transport tribunal that can deal with all transport workers, that is easily accessible, either free to access, or very cheap, it’s very efficient, deals with things quickly, and can give fair outcomes,” he says.

“So that’s a real crucial piece that’s missing in regulation at the moment. There should be regulation that gives all transport workers a minimum suite of rights and standards.”

Experts are also in conflict over whether the legal tests for contractor and employee need revising to create a new category of worker to cover those in the gig economy.

Institute of Public Affairs adjunct legal fellow Aaron Lane, who is also an RMIT lecturer in business and law, says there is already a well-established legal test that is both clear and consistent.

“There doesn’t seem to be any great need to overturn that, other than hypothetical problems,” Mr Lane says.

Ms McAlary-Smith however believes a new category for the workforce is a possibility.

“Is there some other category? Perhaps yes, and perhaps not. That’ll be a conversation that Australia will need to have as a community,” she says.

Melbourne Delivery Service was contacted for comment but did not provide a response.