Unions NSW is demanding the federal government set up a compensation fund for Foodora riders with the food delivery service announcing it will wrap up its Australian operations.
The company says it will wind up by August 20 to focus on markets with "higher potential for growth" amid accusations it's actually trying to avoid obligations regarding workers' back-pay.
The Fair Work Ombudsman took Foodora to the Federal Court in June alleging two Melbourne bike riders and a Sydney driver were classed as "independent contractors" when they did the work of full-time employees.
Another rider appealed to the Fair Work Commission saying he was unfairly dismissed after speaking out over low pay and poor conditions.
His campaign attracted the attention of the Transport Workers Union which on Thursday accused Foodora of abandoning Australia while owing workers millions in back pay.
It was backed on Friday by the state's peak union body which wants the Turnbull government to force Foodora to set up a workers compensation fund.
Unions NSW assistant secretary Thomas Costa told reporters in Sydney companies like Foodora moved their money offshore when challenged in the courts.
"There is a real fear these cases will be successful against Foodora but Foodora won't have the money in the Australian company to pay redundancies," he told AAP on Friday.
The government had set up funds in the past when workers had been abandoned, Mr Costa added.
Foodora denied the accusations, noting it was divesting its interests in France, Italy and the Netherlands at the same time.
The company says it will continue to deal with its legal battles in Australia.
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