A lightning rod for gig economy

Denham Sadler
Senior Reporter

The admission that Foodora riders are “most likely workers” would act as a “lightning rod” for regulation of the gig economy around the world, according to the Transport Workers Union.

Gig economy food delivery platform Foodora entered administration in August after continued accusations of underpaying workers and an unfair dismissal case before the Fair Work Ombudsman.

Late last week, administrators for Foodora released a report to creditors revealing that the company owed its riders $5.5 million in unpaid wages, the ATO $2.1 million, Revenue NSW $550,000 and Revenue Victoria and Queensland $400,000.

After a “significant amount of time”, expert accounting and legal advice, Foodora administrators Worrels said it had determined that riders for Foodora are likely to be classified as workers, and eligible for associated benefits like minimum wage, superannuation and sick leave.

“We have now reached the position that, on the basis of the information available at the date of this report, it is more likely than not that the majority of the delivery riders and drivers should have been classified as at least casual employees of the company rather than independent contractors,” the report said.

Although this would need to be determined on a case-by-case basis, the report found that Foodora riders had been underpaid by more than $5 million in Australia.

Foodora’s parent company, Germany-based Delivery Hero, has agreed to only pay back $3 million of the money it owes in Australia, despite recently posting global revenue of $1.2 billion.

The admission that the gig economy riders and drivers should be classified as workers could have major ramifications for the sector in Australia and around the world.

Tech giants like Uber argue that those that find work on their platforms are contractors rather than workers, and are not entitled to benefits like superannuation, sick leave and minimum wages.

The Transport Workers Union (TWU) has been leading a campaign for better rights and regulations in the gig economy, and will continue to pursue Delivery Hero for the unpaid wages through an international union.

The TWU’s Tony Sheldon said the admission in Australia could be felt across the world.

“This Foodora incident might become a lightning rod for further action in various parts of the world,” Mr Sheldon told InnovationAus.com.

“There are a number of allies in the European Union that have deep concerns about what’s happening with these companies and app-based employment, with companies attempting to sidestep basic human rights at work.

“The direct impact will be that it will encourage other riders to come forward and to make claims against the companies they work for. It also has implications for legislators.”

The TWU is now calling on the federal government to back up the Foodora admission and legislate for better regulation in the gig economy.

“If the government were to apply and make it clear that the Foodora decision by the receivers was applying right across the economy, then app builders could concentrate on making a better app instead of exploiting people even worse,” Mr Sheldon said.

“The pendulum is swinging back. People are sick and tired of 18th century conditions applying through a modern app. Rather than working out how they can steal from people and carry out wage theft, they need to work out how to be innovative and add value for people.”

The Foodora revelations add further fuel to the current debate in federal politics over the gig economy.

While the Opposition has pledged to introduce reforms to better regulate the sector, with an emphasis on workers’ rights, the federal government has knocked back these suggestions, arguing they would stymie innovation.

Shadow employment and workplace relations minister Brendan O’Connor said the Foodora report exposes a failure to deal with the employment issues associated with the changing nature of the labour market.

Minister for Jobs Kelly O’Dwyer has called on Delivery Hero to “do the right thing” and instructed the department to look at “all legal options” to hold it accountable and repay its debts.

Mr Sheldon said he was confident that the rights of workers in the gig economy would be recognised eventually, but the wait has already been too long.

“The problem is that in the meantime there are people being injured with no sick leave or compensation, paid below minimum wage and in many circumstances where wage theft is being carried out. That’s deplorable – as a community we need to be outraged about that,” he said.

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