Food delivery company Menulog will apply for a new employment award to be created specifically for food delivery workers, as it attempts to become the first gig economy company to make all its workers full employees.

Menulog announced last month that it would transition away from the controversial independent contractor model used by food delivery giants such as UberEats, and would instead class its workers as employees, within a “few years’ time”.

On Monday, the company’s Australian managing director, Morten Belling, told a New South Wales parliamentary inquiry into the gig economy said this process was well under way.

Belling said the company was about to start a trial in the Sydney CBD where “hundreds of workers” would be full employees and entitled to award wages and other protections that gig workers do not have.

He said Menulog had started putting up job ads for these roles, and had received applications already.

Last year, five food delivery riders died in Australia within two months, and the inquiry previously heard that riders made as little as $8 a trip – and had their pay cut during the pandemic.

Belling told the inquiry that Menulog decided to make its workers employees because it needed to “meet its moral obligations” as an originally Australian-developed business.

He was asked whether the change would “destroy” Menulog’s business.

“No,” he said. “Otherwise we wouldn’t go down this path.”

He later added: “There’s a likelihood that this will cost us more. We still think it’s the right decision for us – to lift the standards.”

Belling said the company was also providing additional rights to all workers, including contractors, which included an injury insurance scheme that is “as close as we can get to workers compensation”, and setting up voluntary super payments later in 2021.

“We are also in support of a fair portable leave scheme,” he said.

However, Belling said that Menulog would apply for the creation of a new award to cover its workers, because the current award system was not “suitable”.

“We want to go down the route of employing couriers,” he said. “However the regulatory framework provides a few challenges.”

Belling said the company had put its trial employees under the Miscellaneous Award because “there are no other awards that are suitable for the industry”.

He said Menulog would make an application for a new “on-demand industry award”, after consultation with groups including the Transport Workers Union.

Belling also added that the employment model was still a trial, and the company would use the results of the trial to determine what it wanted to do in future.

“We want to make it sustainable for the industry … we want to test it out,” he said.

“We think it is a constraint that there is a minimum shift engagement for example. We think that could be very challenging for our industry. Let’s test it out.”

Menulog was founded in Sydney in 2006, but was bought by British company Just Eat, which later merged with Dutch company Takeaway.com.

Previously, Menulog was an order portal for restaurants with existing food delivery employees, and did not use independent contractors, but it began using gig economy workers in mid-2018.

Belling told the inquiry on Monday that he thought clarity was important for workers and “we think the best way of getting there is through employment”.

Previously, representatives of UberEats told the same inquiry that it thought Menulog’s new model of employee rights was “not the right path forward”.

Matthew Denman, the general manager for Uber Eats in Australia and New Zealand, told the inquiry: “The reason we don’t think it’s the right path forward [is] every time we ask drivers and delivery partners what they like about Uber, they say flexibility, the ability to come online any time they want, when they want.”