Foodora flees from Canada amid union drive

We are now months into the COVID-19 pandemic, and it can feel at times like we are living in a completely different world. One can wonder whether life will ever be the same.

It appears, however, there are some things that never change—as Foodora couriers in Canada learned recently, one of those things is the lengths to which some employers will go to avoid a union drive. Foodora has unceremoniously fled the country, rather than face the prospect of collective bargaining.

Foodora and the Canadian Union of Postal Workers

Foodora and the Canadian Union of Postal Workers (CUPW) had been engaged in a long battle over CUPW’s application for certification as bargaining agent of the food delivery app’s couriers in Canada. The union scored a historic victory in that battle in February of this year, when the Ontario Labour Relations Board ruled that the couriers were dependent contractors for the purposes of the Labour Relations Act, and were therefore able to access the collective bargaining regime under that legislation.

Two months later, Foodora announced that it was closing all operations in Canada effective May 11, 2020, shortly after which it filed for bankruptcy protection. To justify its decision, the company pointed to economic reasons and the supposed saturation of the Canadian food delivery app market. The suspicious timing of Foodora’s move was lost on absolutely no one, however, and its claims of economic hardship were particularly unconvincing, since the food delivery business has exploded during the pandemic.

Foodora’s History of Shutting Down

If there were any doubt about Foodora’s true motivations, the company has a history of shutting down in the face of a legal challenge to its misclassification of employees. In Australia, like in Canada, Foodora attempted to characterize its couriers as independent contractors. When Australia’s Fair Work ombudsman challenged that classification, Foodora fled the jurisdiction.

CUPW has, unsurprisingly, filed an unfair labour practice complaint, arguing that the decision to shut down was motivated at least in part by a desire to avoid unionization. Unfortunately, though, even if this complaint is successful, the union and its members can only hope to receive some monetary compensation. Although CUPW has asked for reinstatement of employees in its complaint, the labour board likely cannot order Foodora to restore its Canadian operations, a remedy it has declined to grant in the past.

Lessons to be Learned

What are the lessons to be learned from the Foodora unionization drive, and its abrupt end? Some have argued, with good reason, that this case exposes the obvious flaws in our labour relations regime. The odds are stacked against unions and their members, particularly in certain sectors like the ‘gig’ economy, making it virtually impossible to successfully unionize. As a result, the legislature needs to seriously consider alternate modes of organizing and bargaining, so that workers like the Foodora couriers are not left behind. (See here for an interesting paper on organizing gig economy workers, published by the ILO.)

Another important takeaway from this case is that we need better oversight of businesses that improperly classify employees as independent contractors. The protections under the Labour Relations Act, as well as minimum standards under the Employment Standards Act, are afforded to “employees”, which, in the case of the Labour Relations Act, expressly includes “dependent contractors”. To avoid these protections, many companies characterize workers as independent contractors in their written contracts, or simply treat them as such, even when the relationship clearly meets the definition of an employment relationship.

Indeed, Foodora appears to be an example of a business whose success depends upon misclassifying its employees. The company’s hasty withdrawal from Canada following the Ontario Labour Relations Board’s ruling suggests that this ending to the Foodora story was, therefore, inevitable. If a company can only turn a profit by evading employment standards protections for its workers, it arguably should not be operating at all.

Employee Misclassification

This result, however inevitable, came at considerable expense to Foodora’s couriers and their union. The onus should not be on them to engage in a months-long legal battle to confirm their proper classification as employees. Employee misclassification appears to be rampant in the ‘gig’ economy, and so the time has long since past for the government to take a more proactive role in scrutinizing these businesses, to ensure that minimum employment standards are being met. Only significant oversight and serious penalties will stop other employers in the gig economy from using misclassification to their advantage.

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without an assessment of your individual circumstances.]

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