The Closure of Foodora’s Operations across Canada Will Likely Have a Chilling Effect on Unionization Efforts by Other Gig-Economy Workers
By: Karina Pogosyan
Back on February 25, 2020, the Ontario Labour Relations Board (“OLRB”) released its first ever decision with respect to workers in today’s gig economy, finding that couriers working for Foodora Inc. (“Foodora”) were dependent, rather than independent, contractors, thereby enabling them to unionize.
Many called this decision a “vindication” for workers in today’s gig economy based on the general consensus that those doing food deliveries or driving passengers for digital platform-based businesses are not true independent contractors, and as such, should be afforded certain minimum employment protections enjoyed by employees in more traditional sectors of the economy.
On April 28, 2020, just two months following that OLRB decision, Foodora announced that it will be closing its operations across Canada on Monday, May 11, due to what it described as a “highly saturated market” and “intensified competition” in the Canadian market, where business “requires a high volume of transactions to turn a profit.” The company’s statement says the rider community has been given a notice period of termination.
Foodora also initiated bankruptcy proceedings, with documents showing the food-delivery company owes more than $4.7 million dollars to hundreds of restaurants across Canada.
The OLRB decision to clarify the worker status of Foodora couriers was prompted when the Canadian Union of Postal Workers (“CUPW”) applied for certification to be the exclusive bargaining agent on behalf of Foodora couriers.
Foodora’s contract with couriers characterizes them as independent contractors, thereby excluding them from statutory benefits afforded to employees under the Ontario’s Employment Standards Act, such as minimum wage, public holiday pay and vacation pay, among others. In applying to unionize, couriers hoped to be able to bargain for some of the similar benefits and job protections that employees enjoy.
However, with Foodora shutting down its operations across Canada on May 11 and applying for bankruptcy, questions now loom as to what this means for gig-workers generally, who may similarly want to seek greater work benefits. Is Foodora’s closure precipitated by the prospect of collective bargaining agreement negotiation with CUPW, which would inevitably call for a higher wage increase and other benefits to couriers? Is the closure the result of the COVID-19 crisis? Perhaps, a combination of both?
CUPW released a statement lambasting the company for its decision to close operations and leaving hundreds of vulnerable workers without income during the COVID-19 pandemic.
While the OLRB decision declaring Foodora couriers dependent contractors provides the groundwork for other gig-economy workers to follow suit and take their own steps towards unionization, Foodora’s decision to close down operations and the current COVID-19 crisis are likely to have a combined chilling effect on unionization efforts by other workers, at least in the short-term.
One thing is for certain: digital app based jobs are not going away anytime soon and neither will the workers’ resolve to secure better work terms and conditions for themselves. Time will tell how the landscape of the gig-economy will change in the coming months and years. This is definitely an area of the labour market to watch.
Author - Extraordinary Damages in Canadian Employment Law