Food delivery firm Foodora pulls out of Australia

  • The company faced criticism from unions about worker payments and faced legal action

Aug 5, 2018-

Food delivery service Foodora is pulling out of Australia this month, with the Germany-based firm saying it is shifting focus to other markets months after being hit with lawsuits over its treatment of workers.

The announcement came as Foodora’s parent company Delivery Hero said it also planned divestment of its operations in France, Italy, the Netherlands and Brazil, without specifying when it would do so.

Big cities worldwide have seen a proliferation of food delivery bikes and mopeds zipping around the streets in recent years that have revolutionised the industry and stoked debate, strikes and legal challenges over precarious conditions for workers in the new “gig economy”.

In Australia Foodora, alongside rivals Uber Eats and Deliveroo, is among the meal delivery platforms that allow people to order from local restaurants via mobile phones.

“Foodora has announced... its decision to leave the Australian market and cease operations in response to a shift in focus towards other markets where the company currently sees a higher potential for growth,” the group said in a statement Thursday.

The service, which entered Australia in 2015, will wind down and close by August 20, the company said.

Also Thursday it said in Berlin that it planned to divest itself of operations in France, Italy, the Netherlands and Brazil while buying online food delivery operations in Romania and Argentina and taking a stake in a Spain-based service that also operates in France and Italy.

Its CEO Niklas Oestberg told journalists that “we prefer to be leader, to have scale” and that “in the markets where we are not leader, and we don’t see a clear path to leadership ... we will either sell ... or eventually shut down”.

Foodora has faced criticism from Australian unions about its operations in recent months, and is facing a Federal Court action by the government’s Fair Work Ombudsman (FWO).

The ombudsman, which filed the legal action in June on behalf of three workers in 2015, alleged that the company “engaged in sham contracting activity that resulted in the underpayment of workers”.

The government agency said the delivery service breached Australian laws by misrepresenting to the trio that they were independent contractors when they were in fact employees of Foodora.

As a result, they were allegedly underpaid by the company.

The FWO said the lawsuit would serve as a test case for the rights of workers amid the rise of gig economy businesses.

The Transport Workers’ Union claimed Foodora’s exit was so it could “avoid responsibility for paying its riders millions of dollars in backpay as a result of wage theft”.

The union said in March it was taking two cases to the Fair Work Commission, Australia’s national workplace relations tribunal, alleging Foodora unfairly sacked two delivery riders.

One rider, Josh Klooger, told national broadcaster ABC he believed he was dismissed after two years with the company for talking about his pay and conditions.

Foodora has said it would not comment on the cases as they are before the courts.

Last month, food-bike delivery staff working for companies like Foodora, Uber Eats and Deliveroo went on a week-long strike in France to demand better pay and benefits.

They demanded standardised pay for a guaranteed minimum number of hours’ work per cyclist, as well as bonuses for working evenings, weekends and when it is raining.

The cyclists accused the government of helping to make permanent what it called “a system based on the precariousness of its workers” through planned legislation.

And a Spanish court in June ruled that a Deliveroo rider should have been treated as an employee, and not as a self-employed contractor, in the first ruling over the rights of such workers in the country.

Published: 05-08-2018 08:38

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