Legal proceedings have commenced against Foodora for allegedly engaging in sham contracting activity that resulted in the underpayment of workers.
The legal action, filed in the Federal Court, concerns two bicycle delivery riders who delivered food to customers in Melbourne and a delivery driver in Sydney.
The Fair Work Ombudsman (FWO) alleges that Foodora breached sham contracting laws by misrepresenting to them they were independent contractors when they were in fact employees of Foodora.
HRD contacted Foodora for comment and a spokesperson said that as the matter is currently before the courts, the company is “unable to comment”.
“However, Foodora will be defending the claims and accusations that have been made against the business,” said the spokesperson.
It is alleged that Foodora required each of the workers to have an Australian Business Number (ABN) and sign a contract titled ‘Independent Contractor Agreement’ on the commencement of work.
The FWO is alleging the three workers were actually employees of Foodora during the relevant period for a range of reasons, including:
* the level of control, supervision and direction Foodora exercised over the workers’ hours, location and manner of work;
* the requirement for the workers to wear a Foodora-branded t-shirt and use food storage boxes and/or bike racks supplied by Foodora;
* Foodora paid the workers fixed hourly rates and/or amounts per delivery and the workers did not negotiate their rates of pay at any time; and\
* each of the workers was not genuinely conducting their own delivery business, in that they: did not advertise or promote their availability to perform deliveries to the public; did not delegate their delivery duties with Foodora to any other person; and did not have their own customer base, business premises and insurances.
Fair Work Ombudsman Natalie James said there has been broad community and academic debate about the status of 'models' using smartphone-driven technology as a means for deploying a workforce that delivers food to consumers from restaurants.
“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,” said James.
James added that the activity of delivering food from restaurants and fast food outlets to customers is not new, and “nor is the 'test' for what determines who is and is not an employee entitled to award rates”.
The FWO alleges Foodora committed several breaches of the Fair Work Act and the company faces penalties of up to $54,000 per contravention.
The FWO is also seeking a Court Order for Foodora to back-pay the workers in full and make superannuation contributions on their behalf. A case management hearing has been scheduled in the Federal Court in Sydney for July 10.