deliveroo

Gig Economy Business Deliveroo Is An “Investment Risk”

Food delivery business Deliveroo is set to list its shares in April, but Aviva Investors has said it will not invest in Deliveroo because of concerns that their delivery riders do not receive the minimum wage, sick leave or holiday due to being self-employed.  David Cumming, chief investment officer at Aviva, told the BBC’s Today Programme investors were taking social responsibilities “a lot more seriously”.  He pointed out that there were a number of reasons for deciding not to invest, and that one of them is due to riders not getting “basic rights for minimum wage, sick leave or holidays”.

Other investors including Legal and General Investment Management, M&G and Aberdeen Standard have also said they will not be participating in Deliveroo’s IPO following a study showing many Deliveroo riders are paid below the minimum wage.  The Bureau of Investigative Journalism analysed invoices from more than 300 riders over the past year and found that one in three made on average less than £8.72, which is the national minimum wage for those over 25.  They also found a more extreme case where a cyclist in Yorkshire logged in 180 hours during a shift and was paid the equivalent of £2 per hour.

Deliveroo denied the claims and said there was flawed data gathering in the report from the Bureau of Investigative Journalism.  Whatever the facts, the riders can be paid less than the minimum wage because they are self-employed and therefore entitled to no statutory rights such as NMW.

As well as possible reputation concerns, there is also a financial risk to any investor should the riders need to be reclassified as workers, and Deliveroo have set aside more than £112m to cover potential legal costs for such an eventuality.  This is likely to be a sensible provision given that the European Commission is considering drafting new legislation governing how the gig economy operates, as we previously reported here.

In addition, Uber recently lost their Supreme Court case regarding the employment status of their drivers, and has subsequently decided to provide all their drivers with certain rights.

Whilst it is positive for investors to be aware of social responsibility issues, we have to hope that they have also considered the alternative perspective of gig economy workers actively choosing that type of work due to the flexibility and freedom it gives – as self-employment allows individuals to pick and choose where and when they work.  If self-employment is a properly informed choice for the individual, and is genuine (i.e. not false self-employment) then it can be very positive for all parties, and it is worrying that there seems to be an increasing default perception that self-employment is “wrong”.

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on print
Share on email

Sign up to our Newsletter

Follow IWORK on social

Subscribe to our Podcast

Latest Articles

News

Better Hiring Institute Launches

Today saw the launch of the Better Hiring Institute, a brand new joint initiative between the UK government and industry.  The organisation aims to ensure

News

Deliveroo Riders Go On Strike

UK Deliveroo riders are refusing to work as part of a pay and conditions protest, hours after unconditional trading in the company’s shares began following

Don't forget to sign up to our newsletter

As we grow our community we want to ensure that we develop the best services for you specifically. It will really help us if you could answer two very quick questions:

Subscribe to Podcast Series

Subscribe to our Podcasts through Apple Podcasts by following the links below:

All About Self Employment

Empowering Agency Workers

Submit Review