Food delivery service “gig economy” operators under the industrial spotlight

Authors: Emily Haar, Senior Associate & Professor Andrew Stewart, Consultant

The Fair Work Ombudsman has recently commenced proceedings against food delivery application “Foodora” in the Federal Court of Australia alleging that the “gig-economy” platform has engaged in sham contracting. Emily Haar, Senior Associate, and Professor Andrew Stewart, Consultant, consider the implications such a finding could have.

The “gig economy” has moved on from disrupting the taxi industry. Now, rather than telephoning your local pizza parlour for your guilty-pleasure quattro formaggi, foodies can open an app on their mobile phone to order, pay, and arrange delivery to their current location, with the delivery driver having no arrangement with the food supplier, other than to walk in and collect the order.

A number of these mobile applications exist, where drivers are put in contact with purchasers and venues. The Fair Work Ombudsman, as part of their current focus on the status of workers within the “gig economy”, has come to the view that at least one such organisation, Foodora, is engaging in sham contracting in the way that delivery drivers and cyclists are engaged.

The Fair Work Ombudsman, in documents filed in the Federal Court of Australia on 12 June 2018, alleges that in 2015 Foodora misled two bicycle delivery drivers, and one vehicle delivery driver, into believing they were independent contractors, rather than truly being employees of Foodora.

Under section 357 of the Fair Work Act 2009 (Cth), it is unlawful to misrepresent a contract of employment as an independent contracting agreement. Even if a misrepresentation can be established, it is a defence to a contravention of section 357 if the employer can prove that the employer “did not know” or “was not reckless” as to whether the contract was one of employment rather than an independent contracting agreement.

Breaches of the legislation carry extensive penalties, while the additional requirement to compensate the affected workers for any unpaid wages, superannuation, leave or other employment entitlements can have disastrous effects on organisations.

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