Food delivery giant Deliveroo is being sued by one its former workers in a case that could have major ramifications for the gig economy.

Key points: A former Deliveroo rider alleges he was paid less than the minimum wage

A former Deliveroo rider alleges he was paid less than the minimum wage Under Australian law, contractors are not entitled to many benefits

Under Australian law, contractors are not entitled to many benefits Deliveroo says its "well-paid" work offers riders "freedom" and "flexibility"

The company is accused of exploiting its bicycle couriers by failing to pay the minimum wage, penalty rates and superannuation.

Former delivery rider Jeremy Rhind will argue in the Federal Circuit Court, that he should have been paid an hourly minimum of $19.49.

Instead, Deliveroo paid him $9 per delivery.

Mr Rhind agreed to the "low rate of pay" because he was a keen cyclist who wanted to make "extra pocket money" to supplement his office job in Canberra.

He was expecting to make several deliveries per hour. But what he did not expect was the long waiting period between each job — which was unpaid.

"It was upsetting and quite a struggle to realise I've been doing all those hours, and it wasn't worth it," he told the ABC.

"I contacted the company several times, but they weren't interested in hearing what I had to say.

"The only step I could take next was start a legal case — it's either that or put up with being underpaid."

'Exploited and humiliated'

In order to succeed, Mr Rhind, who is represented by the Transport Workers Union, will need to convince the court that Deliveroo engages in "sham contracting".

Jeremy Rhind was paid $9 for each delivery he performed for Deliveroo. ( Supplied )

This is an arrangement where a company hires its workers as independent contractors (instead of employees) to avoid paying minimum wage, sick leave, penalty rates, superannuation.

Under Australian law, contractors are not entitled to those benefits as they are treated as self-employed people, running their own businesses.

But a number of Deliveroo riders have told the ABC that was not the case — and they had no real control over how, when or where they worked.

One rider, Mark, said he felt constantly felt pressured by Deliveroo to work long hours, sacrifice his weekends and not take holidays.

"I worked more than a year with no weekends off … usually every day, Monday to Sunday."

"How do I feel? Exploited … humiliated. I don't feel proud [to] earn $5 or $10 per hour [but] I need to buy food for my family."

Mark has been a Deliveroo rider for the past three years, since immigrating from South America to regional Victoria.

When asked why he continued to work for Deliveroo, he said: "I don't have a choice. I've been applying for at least 100 new jobs — and I don't speak good English."

'Flexibility' … with consequences

The outcome of the Deliveroo case will turn on how much control the company has over its contractors, according to Sarah Kaine, a gig economy expert from the University of Technology, Sydney.

"There's definitely a case to be heard, and it will be interesting to see how the sham contracting provisions [of the Fair Work Act] are interpreted in this particular court," she said.

In a statement, Deliveroo defended its practices by pointing to the "freedom", "flexibility" and "well-paid" work it offers to more than 8,000 riders across the nation.

"Deliveroo riders in Australia work 15 hours a week, earning over $22 per hour on average, fitting riding around study, hobbies, caring responsibilities or other work," the company said.

Although Deliveroo offers its riders flexibility, it does come at a price.

Deliveroo has a policy of ranking its riders in a hierarchy or "Priority Groups" every fortnight — a system that sorts them into three groups, 11:00am, 3:00pm and 5:00pm.

In his court documents, Mr Rhind claims Deliveroo's high degree of control suggests riders are more likely to be employees than contractors.

Deliveroo's ranking of its riders bears some similarities to the "batch" system adopted by its failed competitor Foodora, which collapsed in late 2018.

Foodora lost an important case the Fair Work Commission, which found it had engaged in sham contracting by the way it classified riders.

How do 'priority groups' work?

At 11:00am, the best performers are allowed to pick where they work and for how many hours.

By contrast, the worst performers have to wait until 5:00pm, by which time few (if any) shifts are available.

The riders are sorted according to who works the most "super-peak hours" (Friday, Saturday and Sunday evenings) and makes the most deliveries. Riders are penalised for showing up to work late and cancelling too many jobs.

"Priority booking access will be given to the riders who provide the most reliable service," Deliveroo wrote on its website.

"If you decide not to work super-peak hours, that doesn't necessarily mean your priority group will be affected.

However, the important caveat from Deliveroo is: "It all depends on what other riders are doing too."

"There are so many levels on which we should be concerned about this type of work," Dr Kaine said, after reviewing the policy.

"This is exactly the type of arrangements that we fought against a century ago. In particular, workers needing to wait and be at the whim of an employer, as to how much work they could do, and when exactly it could be done.

"That's why we have a system that has minimum rates and awards to ensure workers get stability."

Business model under siege

Mr Rhind is aware of the wider significance of the decision in his case.

"This case will have implications for other riders. Uber Eats, Menulog, and tens of thousands of Australian workers could potentially be affected," Mr Rhind said.

Critics of the gig economy argue that the success of Deliveroo and its rival food delivery companies depends on their ability to keep costs low by maintaining a cheap workforce.

They also say that if the law was to change these companies would be forced to pay employee benefits, which would threaten their business model.

"Just because a worker is engaged via an app doesn't mean they should be forced to work below minimum rates," said Transport Workers Union national secretary Michael Kaine.

"No amount of talk about flexibility can dress this up as anything but exploitation.

"Riders have the right to be paid a fair rate and that is what we will be fighting for."