Foodora offers to pay less than half amount claimed by creditors
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Foodora offers to pay less than half amount claimed by creditors

The German parent of collapsed food delivery company Foodora Australia is offering to pay back less than half the wages, superannuation and tax bill claimed by creditors including workers and the Tax Office.

According to a creditors' report released on Thursday by administrator Worrells, Delivery Hero has proposed a deed of company arrangement under which it will pay $3 million.

Foodora riders are owed $5.5 million according to the company's administrators.

Foodora riders are owed $5.5 million according to the company's administrators.Credit:Jason South

Worrells recommended creditors accept the deed, rather than winding up the company or handing it back to the directors, in part as there were "insufficient realisations to meet all outstanding claims in the company".

The administrator estimated workers had been underpaid $5.5 million based on its conclusion "that it is more likely than not that the delivery riders and drivers should have been classified as casual employees instead of contractors".

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The Australian Taxation Office has lodged a proof of debt for $2.1 million in unpaid tax. Revenue NSW was owed more than $550,000, the report said, while Victoria and Queensland Revenue might claim an estimated $400,000.

The Transport Workers Union said through the International Transport Workers’ Federation, it would put pressure on Delivery Hero to fully pay its Australian riders and "ensure riders in other countries had rights".

Josh Klooger who is claiming he was unfairly sacked as a Foodora food courier.

Josh Klooger who is claiming he was unfairly sacked as a Foodora food courier. Credit:Eddie Jim

Worrells noted that any successful claims against Delivery Hero would need to be enforced in Germany and "the costs and time to resolve any claim will have a large impact on any distribution received by creditors".

Creditors will vote on the Delivery Hero offer on November 16.

TWU national secretary Michael Kaine said the administrators had confirmed what workers and unions had been saying for years - that workers had rights to minimum rates of pay, sick leave and other employee entitlements.

"We need urgent government regulation to protect vulnerable workers and our tax revenues from wealthy tech companies which don’t want to pay their way."

Foodora, which went into voluntary administration on August 17, is still fighting an alleged unfair dismissal case in the Fair Work Commission on behalf of former Foodora delivery rider Josh Kluger.

The Klooger case could help set a precedent for whether food delivery riders are really employees entitled to legal minimum rates of pay, conditions and protections against unfair dismissal under the Fair Work Act.

Foodora has objected to Mr Klooger's claim against unfair dismissal, claiming he was an independent contractor. Protection against unfair dismissal is available to workers defined as employees under the Commonwealth Fair Work Act, but not to independent contractors.

The Fair Work Ombudsman in September dropped its case alleging Foodora engaged in sham contracting by classifying workers as contractors instead of employees in response to the company's collapse.

Anna Patty is Workplace Editor for The Sydney Morning Herald. She is a former Education Editor, State Political Reporter and Health Reporter. Her reports on inequity in schools funding led to the Gonski reforms and won her national awards. Her coverage of health exposed unnecessary patient deaths at Campbelltown Hospital and led to judicial and parliamentary inquiries. At The Times of London, she exposed flaws in international medical trials.