The Fair Work Ombudsman gives notice on the gig economy following the focus on contract shaming due to Foodora Australia Pty Ltd charged with sham contracting activity with its employees classifying them as employees rather than independent contractor.
Contract shaming is the event where the employer intentionally disguises an employment relationship with the worker as an independent contracting arrangement where in fact is engaged as an employee. This is to avoid paying employee privileges with superannuation, workers’ compensation, leave credits, and certain taxes.
Underpaid workers include two 19-year-old Melbourne bike riders and a 30-year-old Indian immigrant residing in Sydney. These workers deliver food and drinks by car knowing they were independent contractors but in reality were Foodora’s employees resulted to an underpayment of $1,621 for the period 2015 and 2016, and missed out of superannuation. Thus, FWO has charged them doing sham contracting activities.
The delivery company claims that they required each worker to have an ABN and signed the “Independent Contractor Agreement” but the FWO said that a mere labeling of the employment relationship as an independent contractor does not make it so. It needs to hold multiple factors in considering if the worker is a contractor or an employee.
Upon making a significant action, investigation shows that the three workers were actually employees because Foodora has shown that it has a high level of control, supervision, direction over the worker’s hour, location and manner of work. It also required the workers to wear Foodora’s branded T-shirt and food storage boxes, and they were paid fixed hourly rates or amounts per delivery.
It was also found that the workers were not actually conducting their own delivery business nor they did not advertise or promote themselves to do deliveries for the public. Furthermore, they cannot authorise other people to do their delivery duties with Foodora and did not have their own target market, business office, and insurances.
Based on these findings, the Fair Work Ombudsman claims that the workers were lawfully eligible to receive the minimum wage rates and other privileges that apply to their position under the Fast Food Industry Award 2010, plus other entitlements such as casual loading, penalty rates, and superannuation.
Foodora will be required to pay $54,000 penalties for each of the multiple charges against if proves that they breached the Fair Work Act. Foodora was also asked for back-pay the underpaid workers.
According to the spokesperson of Foodora Australia Pty Ltd, the company will not be able to comment on this matter for now but will be defending the claims and accusations that have been made against the business.
Schedules hearing of this case will be held on 10th of July.
Furthermore to ensure compliance, bookkeepers are encourage to work with HR professionals who are qualified in providing advice, and believes that the new Diploma of Payroll Services will serve as an opportunity for bookkeepers to gain the set of skills and information about many aspects of the HR function, including the Fair Work Act and the Modern Awards, suited for payroll administration.