Food delivery company Foodora is pulling out of Australia, and will close its doors by August 20.

Key points: Foodora says it will ensure its employees find "suitable alternative roles"

Foodora says it will ensure its employees find "suitable alternative roles" "The company had so many problems," a delivery rider says

"The company had so many problems," a delivery rider says Foodora will return to the Fair Work Commission to defend an unfair dismissal case

In a statement, Foodora said the reason for its Australian closure was to "shift [its] focus towards other markets where the company currently sees a higher potential for growth".

The company has been competing against rivals including Uber Eats and Deliveroo.

Foodora said it would ensure that its employees, "support partners" and contractors found "suitable alternative roles".

Riders happy about the closure

"I feel weird… this is nice news. It's like a dream come true," John Chessal, a Foodora delivery rider, said when the ABC broke the news to him.

"I know a lot of people who want to leave Foodora because it treats their riders badly."

Two weeks ago, Mr Chessal was hit by a car on a busy Melbourne street while delivering for the company.

He sustained a back injury, and his bicycle was damaged beyond repair during the collision.

When Mr Chessal asked Foodora to contribute to his medical expenses, the company refused.

He said the company told him: "That is not our responsibility as you're not an employee — every rider needs to look after himself on the road."

Mr Chessal received an email from Foodora about its closure half an hour after he spoke with the ABC. The email said:

"As the business is solvent, shifts will be available as per normal until 10th August 2018. "Between 10th August 2018 and 20th August 2018, there will be a wind down of services with fewer shifts available. "Accordingly, this email constitutes as written Notice that your Independent Contractor Agreements will be terminated effective 20th August 2018. "If you wish to return foodora equipment such as food boxes and backpacks you may do so between Monday 6th August and Friday 24th August 2018, excluding weekends. "Upon the return of foodora property (in Like Brand New condition) and the presentation of a deposit receipt we will refund your deposit."

Foodora's batch system rewards its best riders by giving them first pick of shifts, while punishing its bottom-performers. ( ABC )

'Oppressive' internal hierarchy

Another rider, Icce Mejia, did not believe Foodora's reason for leaving Australia.

"The company had so many problems — 'shifting its focus to other markets' sounds like an excuse to me.

"I don't know what to say ... Foodora was always proud and boasting about how fast it was growing."

Last month Mr Mejia, along with other riders, told the ABC about Foodora's "oppressive" policy which pits riders against each other in a "survival of the fittest" contest.

This competitive hierarchy is called "the Batch", and it ranks workers according to who delivers the most food, works the most weekend evening shifts, and puts in the longest hours.

The best performers (Batch 1) are allowed to pick their shifts earlier than everyone else.

Batches 4 and 6 are the "worst" performers, and punished with a two-day delay.

These bottom performers are more likely to get shifts at far-away locations, and during times which are not necessarily the most convenient for them.

Mr Mejia was demoted to Batch 6 after he was hit by a car during a Foodora delivery, leaving him unable to work for weeks.

Court cases outstanding

Although Foodora will no longer compete in the Australian food delivery business, it still needs to defend two lawsuits.

Later this month, the company will return to the Fair Work Commission to defend an unfair dismissal case.

It is also being sued by the Fair Work Ombudsman for sham contracting.

Basically, that means misrepresenting its employees as independent contractors (who are their own bosses, running their own businesses) — to avoid paying minimum wage, annual leave, sick leave and superannuation.

Foodora, and its competitors, maintain that its riders are contractors — despite the high level of control it exercises over them, and requirement to wear a uniform.

The company's spokesperson said: "Foodora will continue to manage legal proceedings locally in Australia and will continue to treat them with the utmost importance."

"As the matters are currently before the courts, it is not appropriate for Foodora to make any further comment at this time."

Departure slammed by union

Tony Sheldon, national secretary of the Transport Workers Union, suggested the move was being made to avoid paying its riders backpay, saying three quarters of its workforce was underpaid.

"Foodora would rather pull out of Australia and leave thousands of riders without work rather than pay them the millions of dollars they owe," he said.

"Ever since they arrived in Australia, Foodora, like other food delivery companies, has denied its riders fair rates, superannuation, workers compensation, annual leave, the right to collectively bargain and even forces them to work shifts for no pay at all."