One of Australia’s earliest meal-delivery services has abruptly ceased operations, putting thousands of people out of work and informing customers that they can “no longer place orders” with the company.
In 2015, Deliveroo made its debut in Sydney and Melbourne, and on Wednesday, the company announced it had entered voluntary administration because it needed to invest heavily to compete in Australia.
A total of 120 employees, 15,000 delivery partners, and over 12,000 restaurants in Australia will be affected by the change.
The British firm issued a statement explaining its “difficult decision” to leave the country after evaluating the market.
“In Australia, we have concluded that achieving a sustainable position of leadership in the market is not possible with a disproportionate level of investment that would have highly uncertain returns,” the company said.
No more Deliveroo orders can be placed in Australia as of the closure of the company’s Australian branch.
Customers were informed they had six months to access their accounts and download data before they were closed, and administrators from KordaMentha were brought in to wind down Deliveroo.
Michael Kaine, national secretary of the Transport Workers Union (TWU), said that the union would seek an urgent meeting with Deliveroo administrators to try to get help for delivery workers.
Thousands of people who work as food delivery riders for Deliveroo will be taken aback by this, he predicted.
The TWU “has sought urgent consultation with administrators” about potential benefits cuts for food delivery drivers who could lose their jobs in an instant.
Mr. Kaine called the decision by Deliveroo a “cowardly act” and “urgently needed” the federal government to reform the gig economy.
Deliveroo Will Compensate Its Drivers As The Company Shuts Down And Leaves Australia
When Deliveroo Australia announced it had entered voluntary administration and stopped taking orders, it immediately put 150 employees and 14,000 drivers out of work.
The company, based in the United Kingdom, informed its Australian customers via email on Wednesday afternoon that it would be leaving the market.
The email explained that “Deliveroo Australia has ceased operations,” so customers there can no longer use the service to place orders.
Deliveroo is no different from any other company in that the current economic climate has made it necessary for us to make tough choices.
Drivers are considered independent contractors rather than employees of Deliveroo and therefore are not eligible for employee benefits.
Workers who are directly employed by Deliveroo Australia will be paid first before any drivers or contractors, who are considered “unsecured creditors” in the administration process.
In the event of liquidation, Deliveroo Australia employees will receive two compensation payments, the first within the first eight days and the second following the second creditors’ meeting.
Deliveroo Australia has announced it will be offering four weeks of compensation payable to any driver who has completed delivery within the past three months. Drivers will be paid based on their weekly earnings average over the previous year.
Deliveroo acknowledged it was losing money in Australia due to competition from companies like Uber Eats, Menulog, and Doordash, and that this loss was reflected in the company’s overall global earnings.
Deliveroo Switches Off An App, Leaving Drivers In A Lurch
In the wake of the company’s unexpected demise on Wednesday, Deliveroo drivers are stranded and restaurants are without a delivery platform.
Foodora, an Australian food delivery service, has voluntarily entered into administration due to low profits in a saturated market.
Executives who take on administrative duties voluntarily KordaMentha has informed drivers that they are no longer needed and provided scant details about how they will be compensated for any outstanding Deliveroo payments.
KordaMentha said in a document given to interested parties that it “immediately ceased trading” and would “therefore no longer accept orders or facilitate deliveries in Australia.”
To find out how to submit a Proof of Debt form for amounts owed, “the Administrators will contact you shortly”
Another document explained how riders are classified as independent contractors rather than employees, and thus are not eligible for benefits and are instead referred to as “unsecured creditors.”
After Deliveroo’s bankruptcy, the company’s creditors were told they would have to wait for details before they would know how they would be repaid for their debts.
According to KordaMentha’s document, “the outcome of the Administration will affect how much of your debt will be repaid.”
As stated in the notice of the Second Meeting of Creditors, “the Administrators’ report to creditors will detail further information on the likely return to creditors, if any.”
Similar notices were sent out to restaurants, instructing them to wait to be contacted about overdue payments.
Roughly 15,000 riders and drivers work for Deliveroo, and 12,000 partner restaurants have had their direct revenue stream with the company immediately cut off.
Due to the collapse, an additional 120 employees were fired instantly.
Deliveroo’s losses increased by over 50 percent in the first half of the year, totaling £147 million. The troubled company is also experiencing a sharp slowdown in revenue growth due to the impact of the cost of the living crisis on the demand for takeout.
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