Could UberEats leave Australia? Court ruling raises questions about gig economy longevity

Pressure is building on meal delivery platforms UberEats and Deliveroo over their relationship with drivers following a Fair Work Commission (FWC) decision that deemed a sacked Foodora worker was an employee rather than a contractor.

Last Friday the FWC ruled a Foodora rider who went public with grievances about pay and conditions was unfairly dismissed by the platform, ordering it to pay him $15,559 within 21 days.

Foodora, owned by UK-based Delivery Hero, went into voluntary administration in Australia in August, but the decision could have wide-ranging consequences for the viability of other delivery platforms Down Under.

By treating delivery riders as contractors, UberEats and Deliveroo are saved from providing a range of benefits available to employees, including leave benefits and other loadings.

In the case of the unfairly dismissed Foodora worker, he was paid only $14 an hour in 2016, plus $5 for each delivery completed.

Those conditions further deteriorated in 2018, ahead of Foodora’s eventual closure in Australia.

An uncertain future for meal delivery platforms

An explosion in the popularity of meal delivery platforms has driven growth for restaurants across the country in recent years, but as the law catches up with market leaders, questions are being asked about the future of the business model in Australia, particularly if a broader precedent emerges. 

“If it becomes the view that these riders are employees … it will be very hard for these platforms to survive,” Athena Koelmeyer, managing director at Workplace Law, tells SmartCompany.

Koelmeyer says the specific circumstances of the Foodora decision means it doesn’t spell doom for UberEats and Deliveroo, but it shows the law is quickly catching up with the gig economy.

“The message for people who wish to engage under these sort of arrangements is the FWC will make decisions based on the facts presented to it on a case-by-case basis,” Koelmeyer explains.

In the FWC’s Friday ruling Foodora’s hierarchy system, which it used to separate high performing drivers from others, was found to be evidence Foodora exercised a high degree of control over riders, something typical of the employee-employer relationship.

In this specific unfair dismissal case, the worker was also promoted several times by Foodora prior to his termination.

Other policies, such as riders wearing Foodora logos and colours, were also contributing evidence in the case.

Koelmeyer urged caution against the assumption the outcome of the Foodora case means “everyone in the gig economy is an employee”, but said UberEats and Deliveroo will be carefully examining their own systems to ensure they aren’t crossing any lines.

“They offer services via a platform, but when you dress riders in your logo and give them other things to do they become part of the organisation,” she says.

The Fair Work Commission has made a prior decision ruling its riders are independent contractors and not employees, but Koelmeyer says an overall precedent was yet to emerge on the issue.

Deliveroo was unavailable for comment on Monday morning but an UberEats spokesperson said it offered its partners a flexible way to make money on a schedule that works for them.

“We are committed to building a long-term, sustainable business in Australia and continuing to invest in our relationships with delivery partners,” the spokesperson said.

Higher prices may not be feasible

John Saadie, founder of Order Up, which provides a platform for restaurants and lets them handle delivery, says UberEats and Deliveroo are unlikely to jump the gun on changing their models.

“They’ll wait and see how long they can get away with it, they operate in a grey area and will continue to do so,” he tells SmartCompany.

Saadie says if riders are deemed to be employees by a mounting body of case law then both platforms will be forced to increase prices, which would result in a loss of growth as consumers turn off.

“It’s not feasible for someone to spend double the price just to get things delivered,” he says.

Saadie doesn’t think UberEat’s business in Australia is necessarily at risk, saying the level of investment it has made in the local market means it’s more likely the platform will double down.

“Because of the multi-channel platforms in that business Uber can make it work, they’ve got the numbers,” he says.

Unions are also piling pressure on the platforms, with the Transport Workers Union again calling on the federal government to bring the regulatory hammer down on the sector in the wake of the decision.

“This ruling shatters the foundation that the on-demand economy is built on: that it is okay to rip workers off, steal their wages, refuse them retirement contributions and deny them wages when they are forced off the job because of an injury,” Tony Sheldon, TWU co-coordinator for the on-demand economy, said in a statement on Friday.

There appears to be support for regulatory change within the Labor party, following an inquiry into the future of work earlier this year, which looked at the rise of freelance work over permanent

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