News & Insights

Food delivery service pulls out of Australia as lawsuits loom

Published 03 August 2018

Food delivery service Foodora has announced that it will pull out of Australia but will still have to defend itself in a pair of impending lawsuits.

The gig economy service announced its scale back earlier this week and will cease operations by 20 August, according to the ABC. The firm said that it will wind-down Australian operations as it looks to focus its business on other international markets.

As discussed in Gallagher’s Q2 Market Overview Report, Foodora faces twin lawsuits that are seen as test cases for the sharing economy at large.

The firm will face up to the Fair Work Commission later this month to defend an unfair dismissal case and is also being sued by the Fair Work Ombudsman for sham contracting.

“This could ultimately lead to a precedent-setting ‘sham contract’ decision that would redefine the concept of the gig worker in future,” the Gallagher report outlines.

Legal action hinges on the Ombudsman being generally dissatisfied that appropriate governance and an acceptable salary framework was in place to provide a fair workplace environment for Foodora’s mobile workforce.”

While Foodora has decided to leave Australia, the gig economy is here to stay. With this in mind, the lawsuits could prove to be milestone events to providers similar to Foodora, and their workers.

“An ethical concern has also been raised, questioning whether Foodora workers can be legally classified as independent contractors and essentially treated as employees on notice without access to a range of employee benefits and superannuation contributions,” the report states.

“With the Federal Court due to hear the case in mid-July, the question remains as to whether broader regulation and compliance is required as the gig economy reaches its next stage of maturity.

The Foodora case is explored in greater detail in the Gallagher Market Overview Report, Trust & Data: Into the Breach, which was published on 30 July. The report is available as a digital download.

Talk to our experienced food production insurance experts

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Our team of food production specialists calls on the Gallagher legacy of 75+ years in servicing food production enterprises, which means that whether you are a primary producer, in processing, transit or grocery wholesaling, we have deep understanding of the risks associated with each step of the supply chain and how to manage and mitigate them. 

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Further reading

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Insurance market update: food production challenges from farm to table

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