Leaked emails from Foodora management reveal internal concerns that the food delivery platform is engaging riders on sham contracts and is exposed to legal action that could have a “devastating”, domino-like effect on the business.
The email sent from Foodora’s key client manager to senior management in March advises that rider contracts in their current form would not hold up in court and urges the business to make them “watertight” or risk significant penalties, according to the Australian Financial Review.
The leaked internal communication comes as the gig economy company is facing several cases in the Fair Work Commission that threaten to form a precedent on whether its cyclists are independent contractors or really employees entitled to minimum pay and conditions.
In the email, the manager, who is also a former lawyer, says he has examined the rider contracts and that “they are concerning from a legal perspective”. “Our rider contracts have many key words in them that would blur the lines between employment and contractor arrangements,” he says. “If just one rider laid a successful case it could be devastating for us and could cause a dominos like effect with law suits.”
The manager warns it is illegal to misrepresent an employment arrangement as an independent contract “for the purposes of giving a company more control and power in making decisions over its workers” and that tens of thousands of dollars per contractor could apply.
He notes that law suits are already happening in Italy, where he says the national labour court found against Foodora.
“I think it is important now more than ever that we look into the contracts to ensure they are watertight and meeting minimum standards in Australia,” he says.
“It is at the end of the day these contracts would be put under the microscope should fair work make an investigation.
“Having looked into them recently, I am not convinced that they would hold up as they are.”
The email responds to an update from Foodora’s head of public relations to management about a “cycle of negative press” in March over pay and dismissed riders, that was “compounded” by rallies held by the TWU.
The client manager replies that the “media hype is concerning” and calls for the business to be “extremely clear” to riders about their rights before onboarding them.
In contrast to Foodora’s public insistence that its riders can work with other food delivery providers, the manager says he has seen examples where riders have been “made to feel bad or dismissed for working for competitors”.
“To put these conditions on them is a serious breach from our perspective.”
A Foodora spokeswoman said the emails were “not authorised by Foodora management”.
“It was the personal opinion of one staff member, and does not reflect the legal position of senior management or the company.”
“Foodora Australia rejects any suggestion that it has engaged in any malpractice such as ‘sham contracting’. The business has not made any misrepresentations about its engagement of riders.”
TWU national secretary Tony Sheldon said Foodora had “been caught out” and accused it of “gaming the system” at the expense of young workers.
“They know their contracts are illegal and they know the riders they are engaging should be given the rights and protections they deserve,” he said.
“They have been exposed as discussing ways of making their contracts ‘watertight’ to prevent any rider claiming what they deserve.”
He questioned “what more evidence does the federal government need to change the rules?”
Foodora has brought in new rates of $7 per delivery and does not pay minimum hourly rates, superannuation or paid leave, which would blow out its labour costs by millions of dollars.
The Fair Work Commission has not yet ruled on Foodora’s contractual arrangements but could do so soon after the TWU launched unfair dismissal cases on behalf of riders earlier this year.
Before considering the dismissals, the commission must decide whether Foodora’s rider arrangements resemble an employment relationship, including by examining its level of control over riders, its requirements for uniforms and riders’ freedom to work for competitors.
One of the cases involves Foodora’s sacking of long-time rider Josh Klooger for refusing to hand over control of an unofficial worker chat group used to talk about pay and conditions.
The matter is set for conciliation on May 4 and will move to hearing if no agreement is reached.
The TWU said it “is pursuing other unfair dismissal cases on behalf of delivery riders”.