The Fair Work Ombudsman has commenced legal proceedings against Foodora Australia, alleging the food delivery company engaged in sham contracting activity that resulted in the underpayment of workers.

The legal action relates to two bicycle delivery riders (both 19) who delivered food and drinks to customers in Melbourne and a delivery driver (30) who delivered food and drinks by car to customers in Sydney.

The company faces penalties of up to $54,000 per contravention; with the Ombudsman seeking a court order for Foodora to back-pay the workers in full and make superannuation contributions on their behalf.

The Ombudsman alleges that when Foodora engaged the three workers in 2015, and during periods in which they performed work in 2016, Foodora breached sham contracting laws by misrepresenting to them they were independent contractors when they were in fact employees of Foodora.

It is alleged 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 Fair Work Ombudsman examined the nature of the relationship between Foodora and the three workers and alleges the three workers were employees of Foodora 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.

The Fair Work Ombudsman 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, however the employees had been underpaid their minimum lawful wage rates, casual loading and penalty rates for night, weekend and public holiday work.

It is alleged the three workers suffered a loss of $1,620.74 over a four-week period.

Additionally, it is alleged that Foodora failed to make any superannuation contributions on behalf of the three workers.

Most of the underpayment — $1,168.50 — relates to the Sydney delivery driver, who worked significantly more hours than the two Melbourne workers over the four-week period.

“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,” says Fair Work Ombudsman Natalie James.

“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.”

A case management hearing has been scheduled in the Federal Court in Sydney for July 10.

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