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Home > News > 2018 > September > Broken rules deny workers lost wages after Foodora collapse

Broken rules deny workers lost wages after Foodora collapse

Foodora.jpgLegal action against food delivery service Foodora over staff underpayments has been dropped after the company entered into administration.

 

In June, the Fair Work Ombudsman (FWO) had announced legal action against Foodora for sham contracting, underpayment and failure to pay superannuation.

 

Under its business model, Foodora employed its delivery riders as independent contractors.

 

“What we're alleging is that these delivery workers are not independent contractors, running their own businesses, but in actual fact they're employees,” Ombudsman Natalie James said after the legal action was first announced.

 

The Federal Court case was touted as a ‘test case’ for the gig economy.

 

In the wake of the company’s voluntary administration, announced last month, the FWO dropped these legal proceedings.

 

Despite FWO’s decision, the Transport Workers’ Union (TWU) is continuing to pursue an unfair dismissal case on behalf of former Foodora rider Josh Klooger.

 

The TWU is seeking $47,000 in compensation for the alleged unfair dismissal. Foodora claims, as an independent contractor, Mr Klooger could not have been unfairly dismissed.

 

Under the Fair Work Act, unfair dismissal protections apply to workers defined as ‘employees’ – Foodora claims this does not include independent contractors.

 

It has also been revealed that at the time of entering administration Foodora owed more than half a million dollars in unpaid pay roll tax to Revenue NSW.

 

Additionally, the company is being pursued by the Australian Taxation Office for unpaid superannuation, penalties and interest – an amount that has yet to be fully calculated.

 

Foodora rider John Chessal welcomed the news of the company’s demise, describing how he had been injured while delivering in Melbourne, after which Foodora refused to contribute to his medical expenses.

 

IEUA-QNT Assistant Branch Secretary/Treasurer Paul Giles said Foodora was a clear example of the broken industrial rules governing employment in Australia.

 

“Companies like Foodora are hiding behind the concept of the so called ‘gig economy’ to avoid their obligations as an employer,” Mr Giles said.

 

“All Australian workers need clearly defined and enforced protections at work.

 

“The rules are clearly broken when an employer can simply enter into administration with no prospect of underpaid employees being compensated.

 

“It’s time to overhaul the industrial rules in this country to ensure all workers are provided with the security and dignity of a fair day’s wage for a fair day’s work.”

 

Image credit: Facebook