The Fair Work Ombudsman (FWO) has commenced legal proceedings against online food delivery service Foodora, alleging the local arm of the company engaged in "sham contracting" activity, resulting in the underpayment of workers.
The legal action, filed in the Federal Court, relates to three workers contracted by Foodora Australia. If found in breach of the Fair Work Act, the startup faces penalties of up to AU$54,000 per contravention.
It is alleged by the FWO two 19 year-old bicycle delivery riders who delivered food and drinks to customers in Melbourne and another 30 year-old now-permanent Australian resident who delivered by car to customers in Sydney for the company in 2016 were incorrectly treated, with the FWO saying Foodora breached sham contracting laws by misrepresenting to them they were independent contractors when they were in fact employees.
It is alleged that Foodora required each of the workers to have an Australian Business Number (ABN) and sign a contract titled "Independent Contractor Agreement" on the commencement of work.
However, after examining the nature of the relationship between Foodora and the three workers, the FWO alleges the individuals were actually employees of Foodora during the relevant period.
"The Fair Work Ombudsman alleges that the workers were lawfully entitled to receive the minimum wage rates and entitlements that applied to their positions under the Fast Food Industry Award 2010; and that the amounts Foodora paid them were not sufficient to meet those rates and entitlements," the FWO wrote in a statement.
"As a result of its investigation, the Fair Work Ombudsman allegedly found that the employees had been underpaid their minimum lawful wage rates, casual loading, and penalty rates for night, weekend, and public holiday work."