Food delivery company Foodora is facing court, accused of ripping off workers with sham contracts.
The case could subsequently result in a landmark decision regarding the classification of “employees” and “independent contractors”.
Foodora allegedly rips off workers with sham contracts
The legal action, filed in the Federal Court, involves two bike delivery riders in Melbourne, in addition to a delivery driver in Sydney.
The Fair Work Ombudsman alleges that Foodora falsely employed the workers as “independent contractors” instead of “employees”.
As a result, the company failed to pay proper award rates, penalty rates, leave entitlements, and also superannuation.
Workers allegedly made to sign contracts
The alleged sham contracting involved Foodora demanding workers to get their own ABN, and then sign a contract titled, “Independent Contractor Agreement”.
However, Fair Work argues Foodora engaged them as “employees” because the workers:
- are not genuinely operating their own delivery businesses;
- do not negotiate their rates of pay at any time;
- hours of work, location and also the manner of work are controlled, supervised and also directed by the company; and
- are required to wear Foodora-branded clothing and also use branded food storage boxes supplied by the company.
Workers ripped off
Fair Work argues Foodora should have paid minimum wage rates and entitlements as outlined in the Food Industry Award 2010.
Foodora failed to do so as a result of the sham contract arrangement.
If subsequently proven, the company will have robbed workers a total of $1,620 over just a four week period.
As part of the wage theft legal action, Fair Work is also seeking an order for the workers to be back-paid in full, including superannuation.
Precedent for gig economy
Miles Heffernan, Director of Litigation at IR Claims, says the court’s ruling might end sham contracting in the gig economy.
“If the court determines that these delivery workers are employees, then the food delivery industry will have a potentially huge wage theft claim coming,” he said.
“Employers cannot label workers as independent contractors simply to avoid paying legal wages and also entitlements.”
Foodora consequently faces fines of up to $54,000 per contravention.
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