Foodora owes $8 million to former delivery workers, who will only receive 29 cents in the dollar

Foodora food deliver cyclist
Despite leaving Australia with millions in debt, Foodora is expanding in Canada and other countries.(Wikimedia Commons)

Foodora owes nearly $8 million in unpaid wages and superannuation, but its former workers will only get back a small fraction of that in their wallets.

Key points:

  • Foodora went into voluntary administration in August 2018
  • Despite owing millions in debt to Australians, Foodora continues to expand overseas
  • Its Canadian workers can earn up to $25 per hour
  • In comparison, its Australian riders earned $7 per delivery

The food delivery company had been accused of systematically exploiting its pink-uniformed bicycle delivery riders and underpaying them.

It also claimed to be “solvent” not long before it went into voluntary administration last August, yet owes $28.3 million in “loans” to a related entity, its German parent company Delivery Hero.

Delivery Hero offered $3 million to settle any outstanding wages.

But at a creditor’s meeting on Friday, it was revealed that former riders will only receive 29 cents in the dollar (or $2.27 million) after the liquidator’s costs are deducted.

The liquidator tried to contact 5,500 former Foodora workers, but only 1,700 lodged claims for backpay.

The Transport Workers’ Union (TWU), which represents the former riders, said that “the extent of the wage theft runs to even more millions of dollars” given a vast majority of the workers did not lodge claims.

“Delivery riders in Australia have shown that when they stand together and take on some of the biggest tech giants in the world, they can win,” said Tony Sheldon, TWU’s on-demand coordinator.

“The fact that they didn’t get all of their entitlements is an indictment on the Federal Government, which has failed at every step to hold this company and the entire on-demand economy to account over ripping off workers.”

More successful than it claims

Despite leaving Australia with millions in unpaid debt, the food delivery company is still trading in more than a dozen countries.

April was a particularly busy month for Foodora, with its expansion in the Canadian capital of Ottawa.

It was also recruiting delivery riders as part of its Canadian expansion and seems to be offering them better pay and working conditions, compared to its former Australian workers:

“Shifts are flexible with an earning potential of up to $25 per hour, and provide access to additional perks, including exclusive discounts, medical insurance and team events.”

The company even launched a Game of Thrones-inspired commercial last month titled “Foodora is coming” on its Norwegian Facebook page to coincide with the launch of the popular HBO television show’s final season.

It features an eerie bicycle courier — with unnaturally blue eyes like an undead White Walker — climbing a dark stairwell to make a food delivery.

Delivery Hero posted solid financial results last month, with its first-quarter revenue surging 94 per cent to 267 million euro ($429 million).

At 3:30pm (AEST), Delivery Hero’s market value on the German stock exchange was $13 billion.

In late 2018, Foodora also shut down its businesses in France, Italy and the Netherlands — but continues to operate in Austria, Canada, Finland, France, Germany, Italy, Norway and Sweden, according to its website.

The business is also active under the Foodpanda brand in Pakistan, Singapore, Malaysia, Bangladesh, Thailand, Hong Kong, Taiwan, the Philippines, Bulgaria and Romania.

Sacked for whistleblowing

Foodora’s exit from Australia was well-timed as it lost an important court case shortly afterwards, which may have implications for the hiring practices of its competitors Uber Eats, Deliveroo and Menulog.

The Fair Work Commission (FWC) decided, in November, that Foodora had unfairly dismissed one of its former bicycle delivery riders Josh Klooger for whistleblowing — after he spoke out publicly about the company’s worsening pay and conditions.

Foodora accused of underpayment and sham contracts
Foodora accused of underpayment and sham contracts

Mr Klooger was among the earliest batch of Foodora riders paid $14 per hour, plus $5 per delivery.

But within two years, the company paid new workers as little as $7 per delivery, with no hourly wage.

The FWC also found that Foodora’s delivery riders were in fact employees — but were incorrectly classified as “independent contractors” — due to its high degree of control over them.

This distinction matters because it threatens the business models of companies like Foodora.

By classifying their thousands of workers as “independent contractors”, they avoid paying annual leave, sick leave, superannuation and other costly employee entitlements.

“We knew that what Foodora was doing was wrong and the rates just kept getting worse and worse,” Mr Klooger said on Friday.

“Riders want to be treated fairly. It is now time for other on-demand companies to comply.”

Source: ABC News Australia

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