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Four key questions raised by Foodora’s unfair dismissal case

Lucy Dean
Image: Getty
Image: Getty

Foodora delivery rider, Josh Klooger won his unfair dismissal case on Friday – and it has major ramifications for the gig economy.

The Fair Work Commission (FWC) granted Klooger’s victory after he was fired by Foodora for blowing the whistle on the company’s sub-par pay and conditions.

Also read: Foodora owes workers $8 million but only wants to cough up half

Klooger won $16,000 in the landmark case.

In the time since he was hired in March 2016, the pay offered to rider fell from $14 an hour, plus $5 per delivery to just $7 per delivery with no hourly wage.

Klooger set up a messaging group on Whatsapp with 250 fellow riders to discuss the worsening conditions and appeared on television earlier this year to raise further awareness of the issue.

Within days, Klooger was fired.

This was a “harsh, unjust and unreasonable” move by Foodora, the FWC decided, awarding Klooger the unfair dismissal verdict.

Will other gig economy platforms face the same treatment?

The FWC’s decision is a shot across the bow to other businesses operating in the gig economy, Transport Workers’ Union (TWU) national secretary Tony Sheldon said.

“This fight does not end here. We will continue to pursue Foodora for the money they still owe riders in Australia,” he added.

Also read: Moving overseas? Here’s how to avoid a tax nightmare

“We will continue to demand an end to the exploitation of riders and other on-demand economy workers.”

The FWC also found Foodora treated its workers as employees, not contractors, implying they were also entitled to benefits like superannuation which come with employee status.

“This is a titanic wave coming towards every employer using wage theft as a business model through an app,” Sheldon said.

Foodora left the country in August amid multiple lawsuits, including Klooger’s, while owing debts to Australian workers and the tax office of $8.5 million.

Riders accept $3million compensation offer

The Fair Work Commission decision came just hours after Foodora workers accepted a $3 million offer from administrators Worrells as partial compensation for chronic underpayment.

The administrators earlier this month admitted workers are probably owed around $5 million after being incorrectly classified as independent contractors, rather than casual workers.

Also read: The 28 world economies most ready for the future

Speaking on Friday, the Transport Workers Union’s Tony Sheldon described the agreement a “breakthrough decision” but warned workers at other delivery services like Deliveroo and Uber Eats are “still being exploited”.

Unions call for the government to sue German parent company

Continuing, Sheldon said there is a “fundamental obligation for the government to act”.

“The receivers should push national authorities to lay criminal charges against the German company for the wage theft and the tax fraud that has occurred within this company that has been replicated by other ride-share and food delivery companies.”

In addition to the $5.5 million in lost wages, the Australian Tax Office is also claiming Foodora failed to pay $2.15 million in superannuation.

Why are companies doing this?

A parliamentary report has found wage theft, or systemic underpayment or non-payment of superannuation, entitlements and wages is costing the Queensland economy nearly $2.5 billion a year alone.

“Sham contracting” or the misclassification of workers as contractors to dodge employer responsibilities is included in this.

In one Queensland area, Fortitude Valley, 60 per cent of businesses were found to be non-compliant in a July audit.

Also read: Has the Aussie dollar finally bottomed out?

According to the Fair Work Ombudsman, many businesses use wage theft as a means of staying competitive.

The parliamentary report made 17 recommendations, including a public education campaign with the higher education sector to inform students and international students on their workplace rights and the role of unions.

Can the gig economy turn this around?

The gig economy poses a number of questions for Australian and particular the predominantly younger Australians employed in the sector.

“I can see cultural issues here,” demographer Bernard Salt said at a Mercer event in October.

“The cultural issues that we need to address is [how do we encourage] contract workers, gig economy workers to actually put 9.5 or 12 per cent away…and culturally [how do we encourage] the millennial generation to be aware or connected to their financial future.”

The solution? Re-framing superannuation as an attractive element of a particular employer.

“From an employer perspective, when superannuation first came out it was a differentiator. Now everyone has super,” Mercer CEO Ben Walsh said.

“I wonder if in the future there will be some employers in this gig economy who will actually pay more into super than what is legislated today to actually compete for those contractors and to encourage that agile workforce.”

He said the superannuation system and the businesses which use it needs a major overhaul to meet the needs of future workers.

“Today’s workplace is no longer recognisable from the workplace of 1992, which was predominantly nine to five Monday to Friday, with full-time positions largely held by men. Wide-ranging changes driven by the adoption of technology and automation have revolutionised businesses’ needs and how employees choose to work,” Mr Walsh said.

“A savings scheme structured 28 years ago to reward a lifetime of uninterrupted employment with one firm no longer reflects the trend towards casualisation and contract work, and the job flexibility increasingly being demanded by emerging generations.’’

“We know the current system doesn’t work well for women taking career breaks or working reduced hours, or for contractors and those reliant on the growing gig economy. If we don’t act now, more and more employees will be left out of pocket when they will need their money the most,” he said.

Should I delete my delivery apps?

According to Klooger, yes.

Hungry Australians should move away from delivery apps and order directly through the restaurants, he told the ABC in August.

“It’s better for the restaurants if you go out and support them,” he said.

“Restaurants need it too and if more people were using the restaurants then maybe they could figure out their own way of doing this service and employ the riders and do it in the right way.”