Menulog to Trial New Employment Model for Gig Economy Workers – An Opinion

Volume 19, Issue 8

​Matt Harper

Making the news these past few weeks was the bombshell news that Menulog, Australia’s homegrown food delivery rival to Uber Eats, is planning to trial giving its drivers employee status. This marks a radical departure from prevailing trends in the industry, with major players like Deliveroo and Uber Eats steadfastly maintaining an opposition to any moves to strip their drivers of their current classification as independent contractors. The announcement and what it may mean for the future of insecure work provides abundant fuel for thought about the ethical and economic implications of an ever-expanding gig economy, but it also raises some extremely interesting legal questions as well, leading us to question in whose favour these apparent acts of corporate charity are actually working. 
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The changes were announced by Menulog’s managing director Morten Belling at, fittingly enough, a public hearing of the Senate Select Committee on Job Security on the 12th of April. The timing and nature of the announcement was clearly designed for maximum impact and effect, painting the company as the ‘good guys’ in an industry currently receiving a great deal of bad press for its perceived insecure, unsafe, and exploitative business model.

For all the hype and praise being heaped upon Menulog, the actual details of the changes announced by Mr Belling at the hearing are vague and non-committal at best. The company has “decided to work in the direction of an employment model”, but any long-term substantial change will be dependent upon the outcome of a limited trial in Sydney. It is not known when exactly this trial will be, but in a promising sign the company has undertaken to consult with relevant stakeholders, including the Transport Workers Union (TWU) in the design of the trial model. Other aspects of the plan mentioned by Mr Belling include promises for fair pay and entitlements, but the company remained averse to specifying what these might actually look like, or if they would conform to existing employment classifications, such as casual employment, thereby enlivening the minimum standards attached to that classification (minimum shift lengths etc.). 

The key stumbling block to better conditions in the industry, and the perennial bugbear and chief defence of Menulog and its competitors, is the apparent inflexibility of Australia’s employment law regime and the award system. There is a fair criticism in this – the current nature of gig economy work would most likely be unworkable for many drivers under mandatory minimum shifts of 2 to 4 hours (depending on the relevant award). But it is always a cause for alarm when corporations begin talking about ‘flexibility’ and framing work rights in terms of questions of choice and worker freedom. This is usually nothing more than a dog whistle for looser regulations and free reign for business in dictating employment relationships on terms that exclusively benefit them. When corporations say flexibility for workers, what they really mean flexibility for themselves in providing and taking away insecure work at whim. 

In all fairness to Mr Belling, he seems to be motivated by a genuine concern for his subcontractors. He allegedly even contracts himself out to the Menulog app on occasion and does deliveries, which, if true, would probably give him a far better on-the-ground understanding of his workers’ conditions than most other high-level managers and executives. But even a corporation staffed with nothing but the kindest and most empathetic people can still perpetuate unethical and oppressive structures. It is the very nature of the gig economy which makes it an exploitative and unfair system, not necessarily the personal malevolence of CEOs.  

There have been legal precedents addressing the question of worker rights in the gig economy, with no clear consensus emerging outside of a general principle that there are no real principles – to date, the question of contractor vs employer in the gig economy has turned upon the very specific facts of the case and whether these point towards an employment relationship.

One case from 2018 that found in favour of an employee relationship existing was Joshua Klooger v Foodora Australia Pty Ltd, a decision handed down from the Fair Work Commission. The Commission emphasised the degree of control which Foodora had over the manner in which Klooger performed his work and the autonomy which Klooger had, in addition to other factors such as scheduled shift times and Foodora exercising control over when and where the driver had to work. Clearly this is different in many respects to business models like Uber and Menulog where there are ostensibly less of these traditional indicia of an employment relationship.

Another case from 2020, however, dealing with an Uber contractor attempting to make out an unfair dismissal claim, Amita Gupta v Portier Pacific Pty Ltd, went in the other direction to Foodora, finding that the plaintiff was in fact an independent contractor and as such could not be unfairly dismissed. This was a severe blow to hopes for the legal system to step in and regulate the industry where political willpower has thus far failed.

In the face of a legal climate apparently leaning in favour of the gig economy (as long as the business model is structured right), what then has compelled Menulog to come out in favour of traditional employment? For a start, it is incredibly good press. Ethically-minded food delivery customers will be encouraged to use the app over their rivals, while it is such a relatively non-contentious issue (for people who aren’t the managing directors of gig economy corporations in any case) that the move isn’t likely to lose them any customers either. And there is evidence that it might not just be positive optics either – a move to a fixed employment model may cost the company more per individual worker in entitlements and pay, but overall this new model will likely see Menulog actually cut the number of people who work for it. In the trade-off between a large number of precariously and infrequently employed contractors and a smaller set of fixed and constant workers, the budget will most likely end up breaking even. 

Another clue comes from another of Mr Belling’s statements at the Senate Committee hearing, where he mentions that one of the key drivers in Menulog’s decision was the recent deaths of numerous drivers and couriers in the industry. While there is no doubt that Mr Belling is genuinely distressed by these events, it is an issue which has potential to blow up in the public discourse and cause a great deal of negative backlash on companies like Menulog, providing them with an incentive to ‘get in front’ of the pending scandal and address it on their own grounds before mounting public pressure forces real regulatory change.  Mr Belling might insist that it is not just these deaths that have motivated their employment trial, but the fact remains that the industry has been operating for years and nothing was done until now.

Nevertheless, this is an extremely promising start, and if Menulog makes good on its promise to consult with workers and Industry bodies like the Transport Workers Union, then it ought to be congratulated and put forward as a model to pressure companies like Uber and Deliveroo into following suit. But we must be extremely wary of the company’s exhortations around inflexibility and its insistence on a need to reform awards before it will carry through fully with these changes. That the employment law needs to change with the times is undeniable, but if an industry cannot operate without normalising exploitation, then the issue is perhaps not with overly restrictive laws but with the industry itself.

See the transcript of the Senate Select Committee hearing here. 

Matt Harper is a second year JD student 
The views in this article do not necessarily reflect the views of De Minimis or its Editors