• Menulog Australia says it is proceeding with a trial that will reclassify its independent contractors as employees under a new award.
• The trial will occur within the Sydney CBD where the food delivery platform says “hundreds of workers” will gain full employee status, along with award wages and other protections.
• The new statement follows the company’s announcement in April it would explore a transition.
• Visit Business Insider Australia’s homepage for more stories.

As the food delivery sector faces increasing pressure to better protect its workers following a spate of delivery rider deaths, Menulog assured a parliamentary enquiry its move to reclassify its workers was well underway.

Addressing a New South Wales parliamentary inquiry into the gig economy, Australian managing director Morten Belling said it was about to start a trial in the Sydney CBD where “hundreds of workers” would be made full employees and entitled to award wages and other protections that gig workers do not currently have.

His statement follows an announcement by the company last month that it would transition away from the controversial independent contractor model used by food delivery giants including the company’s competitors UberEats and Deliveroo, and would instead class its workers as employees, within a “few years’ time.”

Belling told the inquiry Menulog decided to make its workers employees because it needed to “meet its moral obligations” as an originally Australian-developed business.

Founded in Sydney in 2006, the company was bought by British company Just Eat which then merged with Dutch company Takeaway.com.

Unlike its competitors, Menulog only began using gig economy workers in mid-2018, after it moved away from being an order portal for restaurants with existing food delivery operations. The new business model was familiar, enlisting independent contractors as delivery workers.

When asked whether the change would “destroy” Menulog’s business, Belling said no, adding that the company “wouldn’t go down this path” if there was a risk of that outcome — though he did acknowledge it would be more expensive.

“There’s a likelihood that this will cost us more,” Belling said. “We still think it’s the right decision for us – to lift the standards.”

Belling said the company would also be providing additional rights to all of its workers, including an injury insurance scheme that is “as close as we can get to workers compensation”, and setting up voluntary super payments later in 2021.

“We are also in support of a fair portable leave scheme,” he said.

However, he said Menulog would apply for the creation of a new award to cover its workers, because the current award system was not “suitable”.

“We want to go down the route of employing couriers,” he said. “However the regulatory framework provides a few challenges.”

He said Menulog would make an application for a new “on-demand industry award”, after consultation with groups including the Transport Workers Union. Belling also said the employment model was still a trial, the results of which the company would use to determine what it wanted to do in future.

“We want to make it sustainable for the industry … we want to test it out,” he said. “We think it is a constraint that there is a minimum shift engagement for example. We think that could be very challenging for our industry. Let’s test it out.”

The law catches up to the gig economy

The food delivery sector, along with the wider gig economy, has faced mounting pressure to change the legal frameworks used to classify, pay and protect its workers. The law is still catching up to an emerging industry that has largely succeeded on the back of a cheap and precarious labour force.

In Australia five food delivery riders died in Australia within two months in 2020. The current inquiry previously heard that riders made as little as $8 a trip and had their pay cut during the pandemic — factors that have been blamed for the deaths.

In a landmark ruling in March the United Kingdom’s Supreme Court required that rideshare giant Uber reclassify its British drivers as workers, as opposed to contractors, guaranteeing them the minimum wage, as well as paid holiday leave, the pension and other conditions.

In April Menulog departed from competitors Uber Eats and Deliveroo, announcing its new trial at a Senate Committee hearing.

Also addressing the inquiry, representatives of UberEats said it thought Menulog’s new model of employee rights was “not the right path forward”.

Matthew Denman, general manager for Uber Eats in Australia and New Zealand, told the inquiry that flexibility would be lost if it changed its business model.

“The reason we don’t think it’s the right path forward [is] every time we ask drivers and delivery partners what they like about Uber, they say flexibility, the ability to come online any time they want, when they want.”

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