Foodora targeted by Fair Work Ombudsman for ‘sham’ contracting
Employment June 12, 2018 11:14 pm By Christine Caulfield | Melbourne

The Fair Work Ombudsman launched legal action Tuesday against food delivery company Foodora, accusing it of shortchanging workers under “sham” contracts.

The Federal Court case, on behalf of two Melbourne delivery riders and one Sydney delivery driver, alleges Foodora broke the law by misclassifying the workers as independent contractors.

Foodora allegedly required the deliverers to have Australian Business Numbers and sign independent contractor agreements, when the workers were in fact employees under the Fast Food Industry Award.

The workers were entitled to minimum wage, casual loading and penalty rates and superannuation, according to the case.

Fair Work Ombudsman Natalie James said Tuesday cracking down on so-called sham contracting — especially in the food delivery industry — was a priority for the agency.

“The only way to answer the question of whether the workers delivering the meals are employees or ‘independent contractors’ is for someone to ask a court to consider the specific ‘relationships’ between a company and its workers,” she said.

“As the national workplace relations regulator, the Fair Work Ombudsman is now putting this question of significant public interest before a court to consider.”

The Ombudsman alleges Foodora committed multiple breaches of the Fair Work Act and faces a maximum penalty of $54,000 per breach.

A spokesperson for Foodora said the company would be defending the case.

“As the matter is currently before the courts, Foodora is unable to comment. However, Foodora will be defending the claims and accusations that have been made against the business,” the spokesperson said.

The case comes three months after the Transport Workers’ Union filed unfair dismissal cases with the Fair Work Commission on behalf of two Foodora riders.

The TWU said the “test” cases would give the FWC a chance to weigh whether delivery riders are protected under workplace laws.

TWU national secretary Tony Sheldon said in a statement in March that the union would be demanding the commission recognise the rights and protections of these gig workers.

Sheldon said 75 per cent of riders work below minimum wage rates. While they are forced to work shifts “on the companies’ terms”, riders have no superannuation or leave entitlements and can be dismissed without warning.

“This is old-fashioned exploitation, which harks back to working conditions from the 1800s. The difference now is that change is coming via apps and by tech billionaires,” said Sheldon.

A spokesperson for Foodora did not immediately respond to a request for comment late Tuesday. Foodora spokesperson Lizzie Kaye said in March in response to the TWU cases that its delivery riders were hired as contractors.

“Contractors have the freedom to work when and where they want, as much as they want, and they have the ability to accept and reject delivery orders as they wish. Furthermore, Foodora contractors are not precluded from engaging with other operators simultaneously. The nature of the contractor status is that there are no guarantees in terms of an hourly rate,” Kaye said.

The FWC ruled in December 2017 that Uber drivers were independent contractors and not entitled to protections under the Fair Work Act.

The Ombudsman’s case is Fair Work Ombudsman v Foodora Australia Pty Ltd.


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Christine Caulfield

Christine Caulfield has been a journalist for 18 years. She was most recently the Co-Managing Editor at US legal news publication Law360. Prior to that she worked as the County Court reporter for The Herald Sun. She is Co-Founder and Editor of Lawyerly.