UberEats to change ‘unfair’ contract that forces restaurants to pay all refunds

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UberEats to change ‘unfair’ contract that forces restaurants to pay all refunds

July 17, 2019 Syndicated 0

UberEats in Australia has agreed to change an “unfair” contract that forced local restaurants to pay for all customer refunds – even if they were not at fault – after an investigation by the Australian Competition and Consumer Commission.

Previously, if a customer requested a refund, that money came out of the restaurant’s pocket – even if the deliverer or Uber itself made the mistake.

Now, after action from the consumer watchdog, restaurants will only cover refunds for incorrect food orders or other mistakes within their control, and Uber will pay for mistakes made by deliverers.

But restaurants continue to pay large commissions to Uber – up to 35% – for every order made through the app.

The ACCC chairman, Rod Sims, said the refund change was a win for small business in the face of a multinational corporation.

Since UberEats launched in 2016, the food delivery giant’s standard contract had made restaurants liable for all refunds. But under Australian contract law, a contractual term can be made void, even if both parties have signed it, if it is unfair.

“[The terms] make restaurants responsible and financially liable for elements outside of their control,” said Sims. “They appear to cause a significant imbalance between restaurants and UberEats.”

“Ensuring small businesses aren’t subject to unfair contract terms by larger businesses is one of our top priorities.”

A contract term can only be ruled void by a court – not by the ACCC – but after investigations from the ACCC and the watchdog’s opinion that the term was unfair, Uber agreed to remove it.

But restaurants who are on UberEats will continue to pay a significant cut of every order to Uber every time food is ordered via the app.

Uber charges restaurants a maximum commission rate of 35% of the total order – and 100% of the additional $5 delivery fee.

Some restaurants, especially those who joined UberEats earlier, have a lower commission rate.

Uber also classes its deliverers as independent contractors, not employees, which means they can be paid below award rates of pay, and are not entitled to leave.

The Transport Workers Union said the removal of “unfair contracts” should also apply to the workers who were delivering the food.

“The contracts Uber has with its workers are also crying out for regulation,” the union’s national secretary, Michael Kaine, said.

“Workers can get terminated without warning or the chance to appeal if there are complaints about food deliveries. If restaurants can be protected over customer complaints and when disputes arise, then why not workers?”

Last year, delivery riders protested their conditions, with some – who worked for competitor Deliveroo – saying they were paid as little as $6 an hour.

In August 2018, competitor Foodora collapsed its operations in Australia, and later admitted it owed workers more than $5m in unpaid wages.

In November, the Fair Work Commission ruled that Foodora riders were legally employees, not contractors as the company claimed.

In response to the ACCC investigation, UberEats will begin changing its contracts from August, and will complete them all by December 2019.

UberEats’ regional manager, Jodie Auster, said the company was “pleased to have been able to engage constructively with the ACCC to resolve this matter”.

Sims said the ACCC would continue to scrutinise the company.

“We will continue to monitor UberEats’ conduct to ensure restaurants are not unfairly held responsible for matters outside of their control and Uber Eats does not hold anyone else responsible for parts of the service it controls,” he said.

According to the ACCC a term can be ruled unfair if it “causes significant imbalance in the parties’ right and obligations”, and if it is “ not reasonably necessary to protect the legitimate interests” of the party who benefits.

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