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Fair Work Ombudsman Drops Legal Case Against Foodora

Fair Work Ombudsman drops legal case against Foodora

The Fair Work Ombudsman has announced that it is dropping its legal action against Foodora, after the food delivery company packed up and left Australia in August last year.

One thousand Foodora workers received just 31 per cent of the wages and entitlements owing to them, after administrators sold the company’s assets late last year. 

Sham contracting

The Fair Work Ombudsman had launched legal action on behalf of three workers, claiming Foodora had engaged them under sham contracting arrangements – classifying them as independent contractors, rather than employees.

Contractors are not entitled to benefits like sick leave and annual leave or a minimum wage like other workers.

The Ombudsman had planned to argue that the two Foodora riders and one delivery driver were in fact employees, because they were required to work certain shifts, and had to wear uniforms and use equipment branded with the company’s logos. 

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No chance of recovering any money

Fair Work Ombudsman Sandra Parker said her agency decided to abandon the legal action, because there was no chance of recovering any money for the workers.

“It is very disappointing for the Fair Work Ombudsman to discontinue this matter because the question of whether Foodora delivery workers were employees or independent contractors was an important matter for a Court to consider,” she said.

“Foodora’s administrators issued a report to creditors stating that it was more likely than not that the majority of Foodora’s delivery workers should have been engaged as casual employees rather than independent contractors, and that the Fast Food Industry Award applied to them.”

Fair Work Ombudsman Sandra Parker has vowed to crack down on sham contracting.

Gig economy workers vulnerable

Industrial relations expert Miles Heffernan from WAGETHEFT.net.au said gig economy workers were particularly vulnerable to exploitation.

“It’s all very well to classify a worker as an independent contractor so you don’t have to pay them entitlements, but when you are telling them when and where to work, and when you are requiring them to wear your company’s uniform, and sport your company’s logo, then you are engaging in sham contracting,” he said.

“Unfortunately, the explosion of the gig economy has meant more and more workers are being left without basic protections and entitlements like sick leave and annual leave, and that is not good for anyone expect greedy businesses that want to increase their profits.” 

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Ombudsman vows to crack down on sham contracting

Ms Parker said cracking down on sham contracting is a priority for her agency.

“Foodora’s decision to exit the Australian market should serve as a warning to businesses that any company that does not comply with our workplace laws does not have a sustainable future operating in this country,” she said.

“It is a priority for the Fair Work Ombudsman to crack down on sham contracting and we urge any workers with concerns about their employment arrangements to contact us.”

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