Food delivery service Foodora will compensate nearly AU$3 million to around 1,700 delivery riders on Friday for underpaying wages and failing to pay superannuation.
Foodora's AU$3 million back payment is a world first in terms of a payout being given to a group of exploited gig economy delivery riders.
The company reached a settlement with the Transport Workers Union (TWU) to pay out the AU$3 million figure to delivery riders, down from an initial AU$8 million, TWU spokesperson Tony Sheldon said at a press conference on Friday afternoon.
The amount provided to delivery riders after the administrators' costs is AU$2.27 million. The highest amount of compensation given to an individual rider is AU$120,000, while around 3,800 delivery riders failed to make claims and will receive a nil amount.
The AU$2.27 million paid to delivery riders, according to TWU, is only 29% of total back pay that Foodora owes to delivery riders.
"We have a situation where we are having an orgy of greed where companies are making millions of dollars at the expense of the Australian community, where food delivery workers, Uber drivers, and many others in gig economies are having money stolen off them, and where they are held to account, the companies are still making substantial millions off of wage theft," Sheldon said.
How riders are classified, as well as whether they are entitled to employee wages, superannuation, and sick benefits, have long been points of contention for companies like Foodora.
In November, the Fair Work Commission came to a decision that Foodora had unfairly dismissed a delivery rider. The rider, Josh Kloger, was found to be an employee as he never operated a separate delivery business and "could only be said to be performing work for Foodora".
The Fair Work Commission case followed the Fair Work Ombudsman taking Foodora to the Federal Court in June, which alleged that two Melbourne bike riders and a Sydney driver were classed as "independent contractors" when they did the work of full-time employees.
Another rider also appealed to the Fair Work Commission in July, saying he was unfairly dismissed after speaking out over low pay and poor conditions for delivery riders.
"There has been broad community and academic debate about the status of 'models' using smartphone-driven technology as a means for deploying a workforce that delivers food to consumers from restaurants and fast food outlets," Ombudsman Natalie James said at the time.
Foodora wrapped up its Australian operations in August after accusations that it had abandoned its obligations to provide back pay to workers.
Foodora is not the only gig economy company facing scrutiny in Australia as of late, with Uber currently in the midst of a class action from over 6,000 taxi drivers for allegedly operating illegally from April 1, 2014, to July 31, 2017.
"Make no mistake, this will be a landmark case regarding the alleged illegal operations of Uber in Australia and the devastating impact that has had on the lives of hard-working and law-abiding citizens here," Maurice Blackburn head of class actions Andrew Watson said last week.
The Fair Work Commission has ruled that a sacked Foodora rider was unfairly dismissed.
Foodora is facing claims of unfair dismissal in front of Australia's Fair Work Commission this week ahead of a Federal Court case dealing with its alleged underpayment of workers.
On-demand delivery service in hot water over alleged 'sham-contracting' of three workers.
Following the completion of an inquiry into the Future of Work by a Senate committee, the Victorian government has announced kicking off its own investigation.
How the gig economy will change in 2019 (TechRepublic)
The gig economy will continue to grow in 2019, and with it comes some new developments. Here's what to expect.