The legal case against Foodora Australia Pty LtD has been dropped, with Fair Work Ombudsman Sandra Parker saying it was highly unlikely the court action would result in any additional payments being made to workers or any financial penalty being imposed on the food delivery company.

The FWO commenced legal action against Foodora in June 2018, alleging the food delivery company engaged in sham contracting activity that resulted in the underpayment of workers.

Foodora ceased operating in Australia in August 2018, with the company’s assets sold by administrators in late 2018 as part of the administration process. More than 1,000 delivery workers received just 31 per cent of the entitlements owed to them as a result, including the three workers subject to the FWO’s legal action.

At the time, administrators Worrells Solvency and Forensic Accountants confirmed the company classified riders as independent contractors instead of employees. It is estimated riders were underpaid $5.55 million in wages, superannuation and tax.

“It is very disappointing for the Fair Work Ombudsman to discontinue this matter because the question of whether Foodora delivery workers were employees or independent contractors was an important matter for a Court to consider,” Parker said.

“Foodora’s administrators issued a report to creditors stating that it was more likely than not that the majority of Foodora’s delivery workers should have been engaged as casual employees rather than independent contractors, and that the Fast Food Industry Award applied to them.”

“Foodora’s decision to exit the Australian market should serve as a warning to businesses that any company that does not comply with our workplace laws does not have a sustainable future operating in this country,” Ms Parker said.

“It is a priority for the Fair Work Ombudsman to crack down on sham contracting and we urge any workers with concerns about their employment arrangements to contact us.”

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