Food delivery giant Deliveroo is being sued by a former worker in a case that could have major ramifications for the gig economy.
Former delivery rider Jeremy Rhind has secured the backing of the Transport Workers Union, which says the Canberra rider is a victim of wage theft by failing to receive the minimum wage, penalty rates and superannuation.
Mr Rhind will argue in the Federal Circuit Court, that he should have been paid an hourly minimum of $19.49. Instead, Deliveroo paid him $9 per delivery.
Mr Rhind says he agreed to the “low rate of pay” because he was a keen cyclist who wanted to make “extra pocket money” to supplement his office job in Canberra.
He was expecting to make several deliveries per hour. But what he did not expect was the long waiting period between each job — which was unpaid.
In his court documents, Mr Rhind claims Deliveroo’s high degree of control suggests riders are more likely to be employees than contractors.
While the gig economy was introduced as a platform for entrepreneurism, giving people the opportunity to be their own boss and manage their own time; while simultaneously providing businesses more flexibility and employment options, in the past 24 months, deep cracks have appeared.
Producers, suppliers, unions, policymakers, and workers alike realise that expectations of a utopian society are not being met.
According to the JP Morgan Chase Institute, the average delivery drivers’ average income has been cut by 53% (more than half) in the last four years.
In 2018, there were two legal cases in particular that put the gig economy in the spotlight by differentiating between employment types and their accompanying entitlements.
In June 2018, the Fair Work Ombudsman (FWO) commenced legal action against Foodora over work and pay conditions.
The FWO alleged Foodora engaged in sham contracting by wrongly categorising employees as independent contractors although their hours and working arrangements were more aligned with that of permanent employees. The proceedings arose from public interest due to prior determinations that the workers were in fact employees and would therefore be eligible for employee entitlements.
Subsequently, Foodora was forced to pay 1,700 of its workers $3 million in back pay and superannuation, before exiting the country.
Read more: Sham Contracting and How to Avoid It.
Regular and systematic casuals can receive additional entitlements.
In September 2018, the federal court ruled in favour of a casual employee to receive paid leave entitlements (WorkPac v Skene) despite receiving casual loading on top of their base rate which is paid to offset not having access to permanent staff entitlements such as paid leave.
The decision was justified on the basis that the employee (though employed as a ‘casual’) worked in a systematic manner – with regular and predictable hours. The pattern of work was viewed as being consistent with permanent employment rather than casual employment.
What does this mean for all employers?
The outcome of the Deliveroo case will turn on how much control the company has over its contractors. Now, more than ever, employers need to be certain that they are aware of the legalities surrounding the classification of their staff. Are your casuals truly casuals? Are your independent contractors really independent contractors – or are they actually employees?
It is very common that the employee who was originally hired as a casual begins working more systematic and regular hours. However, Employsure says employers need to be sure that a casual employee is treated as a ‘true’ casual. If the pattern of the casual’s work starts to mirror that of a permanent employee, such as working regular and predictable hours, they could be eligible for additional entitlements that are associated with permanent staff such as annual leave, and sick leave.
In a statement, Deliveroo defended its practices by pointing to the “freedom”, “flexibility” and “well-paid” work it offers to more than 8,000 riders across the nation.
Mr Rhind is seeking $9,600 in alleged unpaid wages, superannuation and other damages with the case yet to be settled.