Menulog on Monday announced it would directly employ gig economy workers for the first time in Australia.

Under a new business model, to be trialled in Sydney, the company announced it would provide its drivers and riders with a minimum wage, superannuation, and leave entitlements.

Menulog will work with the Fair Work Commission and the Transport Workers' Union to determine employment standards.

Managing director Morten Belling on Monday told a Senate hearing a series of deaths last year of riders working on food delivery apps had prompted him to act.

"When people start getting killed out there and hospitalised, that's where we draw the line," Nine Newspapers reports Mr Belling said.

"It doesn't really matter if they get killed on the Menulog platform or another platform, we play in the same industry, and we don't want to be part of that.

"So yes, it may cost us more, but it's the right thing to do.

"We hope that in a few years' time, all of the workers that are working on the meal platform will be employed."

Goodwill aside, University of Sydney Professor Shae McCrystal says Menulog's move to achieve mutually favourable outcomes is a "sensible strategy", and others like Uber Eats would surely follow.

"What will happen in the longer term is that these models will comply with minimum employment standards, either because they read the writing on the wall - which is what we've seen here - and recognise they need to engage ... or they'll be forced into a model they may not like," she told AAP.

Regardless of the company's motivations, it is a "watershed moment", Prof McCrystal says.

She said Menulog is the first in Australia, and among the first in the world, to step away from the "fiction" riders and drivers are self-employed.

The trial aspect of their promise could be problematic though, she said.

"It's like them saying, 'We're going to trial complying with the law for a while'."

It could even create more legal headaches for the company and their competitors.

"Why are those (Sydney) workers different to any other workers that they engage?"

"It wouldn't prevent anybody else engaged in their normal business model from continuing to bring cases and in some respect, if those workers do that, the Sydney example gives them something to help make that argument."

Federal Labor Leader Anthony Albanese said the announcement was a major breakthrough, but federal regulation is sorely needed.

Mr Albanese joined ACTU Secretary Sally McManus in urging consumers to ditch Menulog's competitors.

That's a pipe dream, Prof McCrystal says.

Companies cannot provide basic employment rights and keep delivering the service at the current price, and most consumers are motivated by cost.

"It would be lovely to think that consumers were motivated by being happy that the worker that delivers the food gets four weeks of annual leave," she said.

"Wouldn't that be lovely. Wouldn't that just be delightful."

But regulatory reform is the only thing that will drive long-term change, she said.

Australian Associated Press