FWO drops legal case against Foodora despite saying it was “important” for courts to consider

The Fair Work Ombudsman (FWO) has put a stopper in its litigation of collapsed food delivery company Foodora, saying the company’s administration last year meant it would be unlikely the court action would recover any further entitlements for employees.

Foodora went to ground in August last year, with the German-owned company saying it was exiting the local market due to other markets having a “higher potential for growth”. However, the company was also fighting the FWO in court over allegations of breaching sham contracting laws by incorrectly classifying employees as contractors.

The court case was categorised as “unquestionably significant” for Australia’s gig economy operators, with the ruling potentially having broader ramifications for workers at other companies such as Deliveroo and Uber.

However, the case has now been scrapped, with the FWO saying it was unlikely to recover additional payments for workers or any financial penalties due to the sale of the company’s assets. In a statement, ombudsman Sandra Parker called the decision “disappointing”.

“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,” Parker 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.”

“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.”

However, Parker’s expressed disappointment at this end of this case is in stark contrast to the FWO’s recent decision regarding Uber, ruling last week Uber drivers would not be considered employees under Australian workplace law after a two-year-long internal investigation by the workplace watchdog.

This was due to the FWO deducing that Uber drivers were not under “any formal or operational obligation to perform work”.

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