Uber in Australia has reached a confidential out-of-court settlement with a food delivery driver, after Federal Court judges questioned the company's argument that drivers are not employees, according to ABC News.

Adelaide-based former Uber Eats driver Amita Gupta and her husband Santosh completed more than 2,000 deliveries between September 2017 and January 2019.

Gupta alleged she was sacked for being 10 minutes late with a delivery and challenged the global ride-sharing giant in the Fair Work Commission. The Fair Work Commission rejected her claim, ruling that she was not an "employee" by law and that it therefore did not have jurisdiction to hear her case. Backed by the Transport Workers' Union, in 2019 Gupta appealed the ruling and then took her legal fight to the Federal Court, which heard detailed submissions last month.

According to The Guardian, the Transport Workers’ Union said it believed Uber had settled the case because the company was facing defeat after a series of critical questions from judges in a court hearing earlier in November.

Labour law expert Prof Joellen Riley Munton from the University of Technology Sydney, said it appeared that Uber had “decided not to take the risk” of a court ruling, and settled.

“Uber has clearly taken the view that a federal court decision (of a full bench) finding that Ms Gupta was in fact an employee would be very disruptive of its business model,” Munton told The Guardian.

According to News.com.au, national secretary Michael Kaine said the hearing exposed a “sham”.

He said the judges’ questions during the hearing exposed how “utterly ridiculous and farcical” the contracts were. “It should not take brave workers like Amita standing up to a global multinational corporation to hold them to account,” he said.

During the hearing, a panel of judges questioned arguments from lawyer Ian Neil, for Uber, that there was "no relationship of employment" between Uber and Gupta and that the court did not need to make a "positive finding as to what that relationship was or is".

Neil said there was a "quadrilateral relationship" between four parties: Uber Eats, the restaurant, the delivery driver and the customer.

Neil added that the drivers worked for themselves and were "delivery partners", rather than employees, and were under no obligation to accept jobs or complete deliveries. When questioned by Justice White about whether there would truly be no consequences for failing to deliver an order, Neil said Uber Eats was "agnostic" about cancellations in deliveries.

The court reserved its decision, but Gupta and Uber had reached a confidential settlement before a judgement could be handed down.