Since their inception in 2012, Deliveroo, the food delivery service firm, have been growing at a phenomenal rate in the UK. The distinct delivery uniforms have become a common place in major cities up and down the country. As the rider base has expanded, criticisms have arisen of the way that Deliveroo compensate these riders. Recently, Deliveroo Co-Founder and CEO, William Shu, has pledged to pay the delivery drivers both sickness and injury benefits if the government adjusts the law to allow them to do so.
Currently, the law classifies Deliveroo’s delivery riders as self-employed, which is the cornerstone of Deliveroo’s business model. This classification allows the riders to work when they want and for as long as they want. Deliveroo claim that this prevents them from paying sickness and injury benefits, as the law does not grant self-employed workers these rights. This is a major issue for many of Deliveroo’s riders as the physical nature of their work leaves them at a greater risk of injury than other jobs. Sustained injury would leave them unable to work which means under their current contracts, they will not be earning.
Despite Deliveroo’s pledge, leaders in the industry have been critical. General Secretary of the TUC, Frances O’Grady, also said that there is nothing stopping Deliveroo paying the workforce a minimum wage and guaranteeing basic rights like holiday and sick pay on their current contracts. Paul Jennings, partner at Bates Wells Braithwaite, said the new regulation was unnecessary. He claims that employers in ‘gig economies’ only use these techniques to reduce their costs.
This problem isn’t unique to Deliveroo’s workers. Workers for other firm’s such as Uber suffer the same consequences and this is a problem for workers across the entire ‘gig economy’. The problem has been growing within the UK as employees of Deliveroo have staged a claim against the firm stating that they are employees and not self-employed. Last year, Uber lost a similar case against its workers in the UK, meaning they were forced to pay the national living wage along with benefits such as paid holiday.
The other important issue is that self-employment contracts do not cover workers under minimum wage laws. Workers in the ‘gig economy’ can work for other firms which allows them to earn additional wages. Deliveroo have then said this makes it impossible to track how much is being earned as minimum wage laws only apply to a single job. Critics have suggested that these contracts are used by firms in the ‘gig economy’ to get away without paying pension contributions for their workers. It also gives employers the advantage of dismissing the workers without worry of unfair dismissal cases.
These issues have led the government to conduct a review into the ‘modern’ working environment in Britain. The report looks at the ‘gig economy’, agency work and the rights of self-employed workers across the board. This review is important as the percentage of the labour force working for the minimum wage rises year on year. Trade Unions were disappointed with the report before it was published. They said the report was too narrow and could have included more issues with low paid jobs.
The reaction since the report has been published has been mixed across different business sectors. Trade Unions have slammed the report saying that it is a wasted opportunity. The Independent Workers Union of Great Britain claimed that Matthew Taylor, the chair of the report, refused to meet to discuss their proposals. They also branded the report as ‘Wishy Washy’ with the legislation suggestions having little impact on the circumstances of workers. One example is Zero-Hour contract workers could request a fixed contract from their employers, however the employer can refuse, leaving the employee very little options.
The report also suggests that employers in the ‘gig economy’ would not have to pay all workers the minimum wage, they would just have to prove that the ‘average’ worker was receiving 120% of the minimum wage, leaving workers open to even lower pay. Many see this as a step backwards especially as all Uber workers are currently entitled to the minimum wage.
It will be interesting to see how the government use the report to enact new legislation and whether the circumstances for workers in the ‘gig economy’ improve.
The full report can be found at: