One in three Deliveroo riders made on average less than £8.72 over the past year, the national minimum wage for those over 25, for their overall time per session in company’s app.
A joint report by the Daily Mirror, ITN and the Bureau of Investigative Journalism also found that one cyclist in Yorkshire was logged in for 180 hours and was paid the equivalent of £2 per hour. Riders’ self-employed status means this is perfectly legal.
The findings have prompted England footballer and anti-poverty campaigner Marcus Rashford to seek talks with Deliveroo, which supports Rashford’s free meals for children programme.
The release of the report, which details how the Deliveroo app algorithm, Frank, works and includes riders’ views on why pay has stagnated, will cause concern for the firm as it prepares for its initial public offering (IPO) on 7 April. Widely recognised as the largest flotation in the UK since 2011, the £8.8bn IPO could net boss Will Shu about £500m.
However, several of the UK’s largest fund managers have said they will not invest in the company.
Aberdeen Standard and Aviva Investors, which manage over £800bn combined, said they would not take part in Deliveroo’s flotation because of the working conditions of its riders. They’ve since been joined by BMO Global, CCLA, LGIM and M&G.
David Cumming, chief investment officer at Aviva Investors, said his firm would not buy shares in Deliveroo’s initial public offering for several reasons, and workers’ rights “is one of them”.
He said there was a “combination of investment risk and social issues that affect our judgment whether the shares are a buy or not”.
Andrew Millington, head of UK Equities at Aberdeen Standard, said that workers’ rights were a red flag, adding: “We wouldn’t be comfortable that the way in which its workforce is employed is sustainable.”
He added it would be interesting to see whether Deliveroo could attract investors over the longer term “without making progress” on worker rights.
“We are concerned about the sustainability of the business model, including but not limited to its employment practices, and also the broader governance of the business,” he said.
Millington also mentioned Aberdeen Standard’s recent decision to sell off Boohoo shares, following allegations of worker exploitation at suppliers to the online clothing company.
Deliveroo, however, said it had seen “significant demand” for stock with interest rising.
“We look forward to welcoming new shareholders next week alongside our currently highly respected existing investors,” it added.
A stalwart of the gig economy, its 100,000 riders are deemed to be independent contractors and are paid by the number of meals they deliver rather than a hourly wage. The classification means they do not benefit from certain workers’ rights. Deliveroo works with more than 115,000 restaurants in 12 countries.
Several hundred Deliveroo riders who are members of the Independent Workers’ Union of Great Britain are expected to take part in strike action on the day of the flotation over pay.
However, Deliveroo maintains that riders are paid in excess of £10 per hour on average.
A Deliveroo spokesperson said: “We are proud to provide work for 50,000 riders in the UK and that thousands more people apply to work with us every week.
“We are confident in our business model, which has been upheld by UK courts three times, including the High Court twice.
“Deliveroo riders are self-employed because this gives them the freedom to choose when and where to work.
Every rider is protected with free insurance and our way of working is designed around what riders tell us matters to them most – flexibility” – Deliveroo spokesperson
“Every rider is protected with free insurance and our way of working is designed around what riders tell us matters to them most – flexibility.”
According to the new report, Deliveroo’s registration documents said it would be “adversely affected” if riders were no longer classed as self-employed.
The company has at least £112m set aside to cover the impact of ongoing legal proceedings across the world but it is widely recognised that the long-term effect of riders being recognised as workers could prove even more costly.
Employers could make a massive difference
Cumming told BBC Radio 4’s Today: “A lot of employers could make a massive difference to workers’ lives if they guaranteed working hours or a living wage, and how companies behave is becoming more important.”
He went on to say that if legislation changed any investment risk would increase as Deliveroo’s riders would be reclassified as workers.
Deliveroo conceded in its flotation prospectus that it faced investigations across Europe over the legal status of its riders, and warned that it might have to rewrite its business model if it was forced to provide them with holiday and sick pay, minimum wages and other benefits.
We wouldn’t be comfortable that the way in which its workforce is employed is sustainable” – Andrew Millington, head of UK Equities at Aberdeen Standard
The status of gig workers was recently elevated by a decision of the UK Supreme Court, which determined that Uber drivers, who did not receive full workers’ rights, should be classified as workers.
Deliveroo recently announced that, as part of the flotation scheme, it would reward riders with bonuses of between £200 and £10,000 depending on length of service. But according to the IWGB’s Alex Marshall, who is quoted in the report: “This does not come close to compensating riders for a lifetime of precarity and poverty pay.” The study cites the case of one rider in York who calculated that his £200 Deliveroo bonus amounted to 6.8p for each order he had done.
The company has so far succeeded in fending off legal attempts in the UK to alter the classification of its riders and drivers but the Independent Workers’ Union of Great Britain is currently appealing against the decision of the Central Arbitration Committee – upheld by the High Court in 2018 – that Deliveroo riders cannot form a collective bargaining unit because they are self-employed.