Food delivery companies trial new working arrangements to improve the gig economy
Maxine Carey-Gorey is one of the ever-growing army of food delivery riders buzzing around streets in Melbourne on electric bikes.
- A start-up founded by an ex-delivery worker says it can pay food delivery workers an hourly rate above minimum wage
- Menulog is also trialling formally employing a group of workers who are paid superannuation and penalties
- Economists warn companies trying to improve conditions for delivery workers will not be able to compete against those who aren’t
“It’s lovely,” she said.
“I enjoy cycling as it is. I like to get out and pick up these shifts whenever I can.
“I’m an animator mainly working in television. But when I can’t pick up gigs that way, this is a nice way to earn some extra money.”
It is unusual to hear someone so happy in an industry notorious for underpaying and exploiting its delivery riders in a job that can also be dangerous.
So-called ‘gig economy’ companies like UberEats, Deliveroo and Menulog usually pay their workers per task.
But Maxine is one of the few riders working for a guaranteed hourly rate, earning $29.50 an hour for her four-hour shift — whether she is busy or not.
She is still an independent contractor – which means no superannuation, penalty rates or workers compensation.
But Maxine says it is far better than sitting around waiting for a job earning nothing at all.
The company Maxine works for is a startup, founded by ex-delivery driver Vishal Plato – who hated the stress of never knowing if he would be making money on the evenings he spent on his bike.
“I used to wait around in the streets for a long time, and never used to get paid for that,” he said.
He said even when a call did come through, it was barely worth it.
“Maybe you get five bucks, or you’re getting six,” he said.
“It’s not good enough payment. So that’s why we change the system.”
Waiting around for free
The question is – will it work? Especially in an industry where the gig model has been firmly entrenched for years.
Vishal Plato says it will. His company Fuel It Up partners with restaurants, which pay a volume-based monthly subscription fee, plus a flat fee per delivery — $6.99 — which Mr Plato said created enough margin to pay his workers by the hour.
Mr Plato said it was a win-win for restaurants because the customers also ended up paying less for food.
“My business helps restaurants to run more efficiently, drivers to earn more, and customers are paying what instore prices are,” he said.
Mr Plato’s 18-month-old venture, backed by a $110,000 investment from him and some friends, has mostly been running at a loss, but turned a profit for the first time in January.
At the moment, the venture operates mainly in Melbourne’s inner south-east including in South Yarra, St Kilda and Richmond, and with more than 100 riders on the books.
Customers can still order from participating restaurants through UberEats, but the delivery riders are paid an hourly wage — and because they operate within defined boundaries, they don’t have to wait long or travel far for delivery jobs.
High delivery fees a concern for restaurants
Luca Sommella is the co-owner of MIS Pizza, an Italian restaurant in South Yarra who said delivery companies were a crucial but expensive part of hospitality during the pandemic.
“Using Fuel It Up has helped to really reduce the amount of money we were leaving behind with UberEats,” he said.
His business still pays 16 per cent to have its food appear on UberEats’ ordering platform.
But Mr Sommella said the fees to Fuel it Up were less than the 30 per cent fee UberEats charged to use its own delivery riders.
Menulog pushes for new labor agreement to cover its workers
Menulog is another Australian food-delivery company which is looking at different ways of doing business.
Currently about 20 of its workers are engaged as employees as part of a trial, though the rest of its delivery workforce remain contractors.
Menulog’s employee group can access penalty rates, minimum wage, superannuation and workers compensation like conventional employees.
But Menulog wants a new industry award agreement to cover them, something rejected by the Fair Work Commission in January.
“Unfortunately, under the [Road Transport and Distribution] award, which was not designed with an on-demand workforce in mind, there are limitations to being able to accommodate the flexibility sought by our workers,” a Menulog spokeswoman said in a statement.
It said as an example, it was unable to offer split shifts under the award agreement – something which is not an issue for its drivers who are engaged as contractors.
Minimum standards need to apply to everyone, union argues
Jim Stanford is an economist and director at the Centre for Future Work who said even if Fuel It Up and some Menulog workers were getting an hourly wage it was not exactly “progress”.
“We’ve been arguing about a minimum wage for, you know, over 100 years,” he said.
“That principle absolutely can and should apply to gig work just like any other job that we do.”
Mr Stanford said it is not the award agreement that is the issue either.
He said the real problem was that even if companies like Menulog and Fuel it Up were trying to do better by workers, they were competing against others who were not.
“Watering down the provisions of our awards, which are already at kind of safety net bare minimum levels is not the answer here,” he said.
Mr Stanford and the Transport Workers Union (TWU) are calling for federal government intervention to level the playing field, specifically with legislation to clearly define who is and who is not an employee.
“Fuel it up and Menulog and others who are trying to do the right thing should be supported,” TWU National secretary Michael Kaine said.
“But to support them, we need governments and the federal government in particular, to put in place laws that make sure workers are safe and that they are getting a decent wage for the work that they do.
“I think there is an element here, about getting consumers to vote with their feet, but they need to have somewhere to go.”
In a recent Senate inquiry on job security, which had a Labor majority, government senators did not support recommendations around strengthening protections for gig workers through law reform.
A dissenting report from Liberal and National senators noted the “benefits of flexibility and freedom that such arrangements provide to tens of thousands of Australians”.
Delivery rider Maxine Carey-Gorey said for her, being a contractor or an employee was not really a big deal.
“The flexibility is an incredible draw point,” she said.
“There’s enough work so if you want to be there every day you can, but you don’t have to be there every day.”