This article is more than 2 years old

This article is more than 2 years old

The fair work ombudsman has launched legal action against Foodora, alleging its food couriers should be classed as employees rather than independent contractors.

In what could become a landmark case for the gig economy, the ombudsman is arguing that Foodora workers are entitled to the minimum award wage, and the company should be fined hundreds of thousands of dollars for underpayment, sham contracting and breaches of the Fair Work Act.

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Foodora and other companies like UberEats and Deliveroo class their workers as independent contractors.

This means they are not entitled to award wages, penalty rates, leave or other protections under the Fair Work Act that employees receive. Some food app riders say they end up earning as little as $6 an hour.

Foodora riders are paid per delivery, and in May a spokeswoman said the current rate was between $7 and $9 per delivery.

The claim, filed in the federal court on Tuesday, focuses on three Foodora couriers: two 19-year-olds from Melbourne and a 30-year-old from Sydney.

The fair work ombudsman, Natalie James, said the level of control that Foodora exerted over the three workers meant that they were legally employees.

“Courts have found again and again that merely labelling the relationship to be one of independent contracting does not make it so,” she said. “The activity of delivering food from restaurants and fast food outlets to customers is not new, and nor is the ‘test’ for what determines who is and is not an employee entitled to award rates.”

Foodora and other delivery companies argue that their workers are contractors because they provide their own bikes and vehicles, have the flexibility to choose when to work, and can refuse or delegate work.

In 2001 a landmark high court case found that bicycle couriers who were forced to wear the uniform of their courier company were employees, not contractors. However, in the UK, a court found in November that Deliveroo riders were in fact contractors.

Accidents, stress and uncertainty: food delivery riders lift lid on work conditions Read more

Current Australian labour law holds that a mix of multiple factors of control will determine whether a worker is an independent contractor or employee.



James said the ombudsman’s investigation into the three Foodora workers showed a high level of control – including the fact that riders had to wear branded uniforms.

She said Foodora exercised control over the workers’ hours, location and manner of work; and the fact that Foodora riders could not negotiate pay, and could not develop their own customer base while working meant they were not independent contractors.

The ombudsman claims the three workers were underpaid by $1,620.74 over four weeks, and also missed out on superannuation.



If found to be in contravention of the Fair Work Act, Foodora could be penalised $54,000 for each contravention.

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The Transport Workers Union is also arguing for delivery riders to be considered employees, and has filed legal action against Foodora for unfair dismissal on behalf of several couriers.

The union’s national secretary, Tony Sheldon, said app-based food delivery needed to be regulated.

“The sham-contracting comes as no surprise to the thousands of delivery riders,” he said. “But action must go broader than just one company and just a few riders. This area is crying out for regulation.”

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A Foodora spokeswoman said the company would not comment while the matter was before the courts.

“However, Foodora will be defending the claims and accusations that have been made against the business,” she said.

The ombudsman’s case will proceed to a case management hearing in Sydney on 10 July.

