Foodora accused of sham contracting

Jun 13th, 2018

The Fair Work Ombudsman has declared Foodora, the online food delivery company, to be in breach of the Fair Work Act by treating its delivery drivers as independent contractors, when in fact they are employees. This case involves three workers with the alleged underpayment for all three combined to be a total of $1,620. The company faces a $54,000 fine for each contravention of the Fair Work Act.

As a contractor, delivery drivers are not entitled to the minimum wage rate, casual loading, penalty rates and public holiday rates and pay their own superannuation. Contractors essentially run their own business and decide when and where they are going to work. They set their own prices and provide their own tools. As the Foodora delivery drivers do not advertise their services to the public, do not have their own customer base or premises; they are deemed by the Fair Work Act to be employees.

This will absolutely be a test case for the gig economy as it is the first case of its type brought before the courts, involving these new technology driven platforms matching consumers to services. Foodora has endeavoured to provide drivers with more certain hours, pay and better work health and safety coverage. Ironically, this could act as the online food giant's downfall as this type of arrangement is generally more indicative of employment.

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

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