40 staff and 1000 contracts affected as foodora closes its Australian operations

Digital food delivery service provider says it will continue to manage active legal proceedings against group now in the courts

More than 40 employees and 1000 independent contractors are being affected as digital food delivery service provider, Foodora, closes its Australian operations later this month.  

The company confirmed yesterday its plans to exit the local market after three years battling it out against the likes of UberEats and Deliveroo. It also comes as the company battles several court cases, including a lawsuit from the Fair Work Ombudsmen for alleged sham contracting, and an unfair dismissal case being led by the Fair Work Commission.  

In a statement sighted by CMO, foodora Australia country manager, Jeroen Willems, attributed the decision to a shift in focus towards other marketers where the business sees a higher potential for growth.  

The company said it will work to ensure its 41 employees find suitable alternative roles, and expressed its support for partners and contractors during the transition period. Foodora will wind down services and close by 20 August. As well as its on-staff employees, the company has 1000 independent contracts and more than 2500 restaurants on its books.    

“We wish to express our gratitude to all of our customers, contractors and employees for their dedication to foodora Australia, and for allowing us to be a part of their everyday,” Willems said. “It has been a privilege to bring the food you love right to your door.”  

According to comments made to the ABC by current and former riders for foodora, the company has been suffering a range of problems in the local market, include questions around growth, a hierarchical system for riders that many claimed was unfair, and poor works compensation and rates for its delivery contractors.  

Legal proceedings also continue. In June, the Fair Work Ombudsman (FWO) launched legal action against foodora in the Federal Court, relating to two bicycle delivery riders who delivered food and drinks to customers in Melbourne and a delivery driver who delivered food and drinks by car to customers in Sydney.

The action alleges while working for foodora in 2015, and during periods in which they performed work in 2016, the company breached sham contracting laws by misrepresenting to them they were independent contractors when they were in fact employees. On 26 July, Justice Perram ordered foodora to file and serve its defence by 31 July, and the next step is a case management hearing scheduled for 4 September.

In addition, foodora is being pursued by the Fair Work Commission in an unfair dismissal case arising from former rider, Josh Klooger, who first started working for the company in Melbourne in 2016. A spokesperson said the matter is currently being dealt with by a Commission Member and no outcome has been reached yet. No further official statement is available.

A foodora spokesperson told CMO the company will continue to manage legal proceedings locally in Australia and will continue to treat them with the utmost importance.  

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu   

 

 

 

 

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