Foodora hit with sham contracting court action

DELIVERY company Foodora is facing court action for alleged sham contracting resulting in underpayments of workers.

DELIVERY company Foodora is being taken to court by Australia’s workplace cop in a major test case to determine whether so-called “gig economy” workers should really be classified as employees.

The Fair Work Ombudsman commenced legal action in the Federal Court on Tuesday alleging Foodora engaged in sham contracting activity that resulted in three workers being underpaid $1621 during 2015 and 2016.

The FWO alleges Foodora misrepresented to the three workers — two Melbourne bike riders aged 19 at the time and a 30-year-old Indian immigrant living in Sydney who delivered food and drinks by car — that they were independent contractors when they were in fact employees of Foodora.

Foodora allegedly required each of the workers to have an Australian Business Number (ABN) and sign a contract titled “Independent Contractor Agreement”. The FWO said it applied a multi-factor test to consider whether the workers were “employees” entitled to minimum wages and conditions under the Fair Work Act or “independent contractors”.

“Relevant to the decision to litigate in this case is the extent to which contracting arrangements are utilised by this significant business,” Fair Work Ombudsman Natalie James said in a statement.

“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 and fast food outlets.

“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.

“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 FWO alleged the three workers were actually employees for a range of reasons, including the level of control, supervision and direction Foodora exercised over the workers’ hours, location and manner of work, and the requirement to wear a Foodora-branded T-shirt and food storage boxes, and that they were paid fixed hourly rates or amounts per delivery.

It also pointed out that 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.

The FWO alleges the workers were lawfully entitled to receive the minimum wage rates and entitlements that applied to their positions under the Fast Food Industry Award 2010, including casual loading, penalty rates and superannuation.

Ms James said gig economy businesses that treated people who performed work as independent contractors needed to be careful.

“Courts have found again and again that merely labelling the relationship to be one of independent contracting does not make it so, and it is the substance of the relationship that decides the status of the workers and the regulatory requirements that flow,” she said.

“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.”

If found guilty, Foodora faces penalties of up to $54,000 for each of the multiple alleged breaches of the Fair Work Act. The FWO is also seeking orders for Foodora to back-pay the workers.

A Foodora spokeswoman said, “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.”

A case management hearing has been scheduled for July 10.

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