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Money Food delivery company Foodora facing “unquestionably significant” legal action over alleged sham contracting

01:31  14 june  2018
01:31  14 june  2018 Source:   smartcompany.com.au

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

  Online food delivery company Foodora facing legal action over alleged underpayment of staff <p>Australia's Fair Work Ombudsman has launched legal action against online food delivery giant <g class="gr_ gr_3 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling ins-del multiReplace" data-gr-id="3" id="3">Foodora</g>, accusing the company of sham contracting and underpayment.</p>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.

Australia’s Fair Work Ombudsman has launched legal action against food delivery giant Foodora The ombudsman alleged that between 2015 and 2016, Foodora breached sham contracting laws by telling the workers they were independent contractors when they were in fact employees.

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

A 'Foodora' delivery service courier enters a building.© JOHN MACDOUGALL/AFP/Getty Images A 'Foodora' delivery service courier enters a building.

Food delivery startup Foodora has been accused of sham contracting and worker underpayment by the Fair Work Ombudsman (FWO) in a case that has been called “unquestionably significant” for the future of Australia’s gig economy.

Yesterday, the FWO filed legal action against Foodora in the Federal Court in relation to the engagement of two bike delivery riders in Melbourne, and one car delivery driver in Sydney.

The ombudsman alleges that upon engaging the workers in 2015, Foodora fell foul of sham contracting laws by misrepresenting the workers as independent contractors, rather than employees of the company.

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Australia’s Fair Work Ombudsman launches legal action against food delivery giant Foodora for allegedly underpaying its workers by calling them independent contractors .

Food delivery company Foodora will face allegations that it engaged in sham contracting that resulted in the underpayment of workers as contractors instead of employees. The Fair Work Ombudsman is taking Foodora to court for alleged sham contracting .

Despite each worker having an ABN and signing an ‘Independent Contractor Agreement’ with the company, the FWO alleges that the workers’ responsibilities and conditions meant the three should have been considered employees and were therefore entitled to minimum wage rates and entitlements as per the Fast Food Industry Award.

Due to this, the FWO also alleges the three workers were underpaid a total of $1,620.74 over a four-week period, due to the company not providing them casual loading and penalty rates for weekend and overnight work.

“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,” Fair Work Ombudsman Natalie James said in a statement.

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

© Getty Images 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

“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.”

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Australia's Fair Work Ombudsman launches legal action against food delivery giant Foodora for allegedly underpaying its workers by calling them independent contractors .

© Getty Images 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

In a statement to SmartCompany, a spokesperson for Foodora said the company was unable to comment, due to the case being before the courts, but said Foodora would be “defending the claims and accusations that have been made against the business”.

Foodora© Smart Company Foodora “The case will be unquestionably significant”

Rumblings of issues with Foodora riders’ employment contracts have been building over the past few months, with a leaked staff email warning staff of sham contracting issues in April, and billionaire businessman Jack Cowin calling for a government inquiry into gig economy companies last month.

This isn’t the first time the FWO has looked into gig economy companies operating in Australia, with the workplace watchdog also beginning an investigation into ride-sharing operator Uber last year. However, speaking to SmartCompany, workplace lawyer Peter Vitale says action against a “bike courier” food delivery company was “undoubtedly a long time coming”.

Vitale believes the FWO was emboldened to take action against Foodora thanks to an array of previous cases, including a recent case from the UK where Uber drivers were found to be employees, and a 2001 case against bike courier company Vabu, where an independent contractor cyclist engaged by the company was found to be an employee, meaning Vabu was therefore liable for its cyclist striking a man and causing him personal injury.

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Foodora ’s contracts with its delivery riders are coming under scrutiny with reports that a company manager has raised concerns over the contracts ’ legality . Foodora is currently facing a number of cases in the Fair Work Commission that threaten to form a precedent on whether Foodora cyclists

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“It was inevitable these matters would find their ways into the courts, and there are potentially big ramifications for the wider gig economy,” Vitale says.

However, Vitale warns it’s hard to draw a blanket conclusion on the effects of the FWO’s case against Foodora could have on other gig economy operators. He believes the extent to which the workers were considered to be running their own business will likely be paramount in the proceedings, a consideration he thinks would be harder to apply to Uber drivers, as they provide their own vehicles.

“The key issue with these food couriers is that they obviously get to choose when they work and when they don’t work, which will be a key point in the favour of concluding if they are contractors or not,” he says.

“Regardless, the case will be unquestionably significant.”

The FWO claims the workers should have been considered employees, due to Foodora’s level of control and supervision over the hours and location of their work, the requirement for the workers to wear Foodora-branded t-shirts and food boxes, and the fact that each worker “was not genuinely conducting their own delivery business”.

Vitale says, for all businesses, the last point is important, with the FWO taking into consideration in cases such as this whether the engaged worker is “indistinguishable from the remainder of the business”.

Foodora faces “several” alleged breaches of the Fair Work Act, with a maximum penalty of $54,000 for each.

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