Online food delivery company Foodora facing legal action over alleged underpayment of staff

| 13.06,18. 05:45 AM |

Online food delivery company Foodora facing legal action over alleged underpayment of staff

Photo: Foodora operates in Melbourne, Sydney and Brisbane. (Facebook: Foodora)

Australia's Fair Work Ombudsman has launched legal action against online food delivery giant Foodora, accusing the company of sham contracting and underpayment.

In documents filed in the Federal Court, the ombudsman alleged the delivery service treated three of its delivery drivers as independent contractors when they were in fact employees of the company.

As a result the workers — two from Melbourne and one from Sydney — were underpaid the minimum wage rate, casual loading, penalty rates and public holiday rates.

Foodora is also accused of failing to pay superannuation.

The ombudsman estimated the alleged underpayment cost the three workers a combined total of $1,620.

"What we're alleging is that these delivery workers are not independent contractors, running their own businesses, but in actual fact they're employees," ombudsman Natalie James told ABC Radio Melbourne.

"If you're an independent contractor, essentially you're running your own business.

"So the sorts of features we usually see are they provide their own tools, they decide when they're going to work, how they're going to work, they set their own prices. They're working for themselves.

"We say that these particular workers had features that made them employees rather than independent contractors."

Foodora said it could not comment because the matter was before the courts.

"However, Foodora will be defending the claims and accusations that have been made against the business," it said in a statement.

In court documents the ombudsman also argued the workers were employees because they were required to wear a uniform.

It alleged the workers were not conducting their own delivery businesses because they did not advertise their work to the public and did not have a customer base or business premises.

"This case will squarely put before the court the question of whether these three workers, who were working for Foodora at the time, are employees or not and the question of whether sham contracting has occurred," Ms James said.

"This is probably the first case to be brought before the court, involving one of these relatively new technology-driven platforms which matches consumers to services.

"This business has some things in common with some other businesses we're all familiar with. Many of us love the convenience that they offer.

"The question is, are the work arrangements lawful, and that's what we're asking the court to decide."

Foodora is also accused of making the three workers sign an independent contractor agreement and provide an Australian Business Number (ABN).

According to its website, Foodora asks all its drivers or riders to provide a valid ABN.

The court documents specifically mention Foodora managers Oliver Misner and Alain Trabelsi, its head of operations in Melbourne Dennis Murselovic, and its head of driver recruitment in Sydney Sean Weaver.

Foodora a 'test case' for the gig economy

The ombudsman asked the court to make Foodora backpay the three workers and contribute to their superannuation.

The company faces a $54,000 fine for every contravention of the Fair Work Act.

Caleb Goods from the University of Western Australia, who researches the wider implications of the gig economy, said companies like Uber, Deliveroo and Foodora had all been treating their workers as independent contractors.

"And so this really brings into question that business model," he said.

"It's absolutely a test case for the gig economy and for this way of organising workers."

Dr Goods said that when it came to food delivery, Foodora was one of the more "caring" companies, providing its drivers with more certain hours, pay and better occupational health and safety coverage.

"It is almost a perverse outcome. But that's maybe been its downfall in this context as well," he said.

"Because it provides those services, it looks more like a traditional employer, whereas Uber Eats and Deliveroo have kept a more arm's length relationship, which is probably closer to an independent contract relationship."

Dr Goods said that despite the ombudsman's intentions, the case may result in gig economy providers distancing themselves further from workers so they do not fall prey to sham contracting allegations.

The case is set to appear in the Federal Court in Sydney on July 10.


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