Lone riders: Deliveroo’s deliverers once again deemed self-employed

July 6, 2021

2 min read

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What's going on here?

In the fourth decision on the matter, the Court of Appeal held that Deliveroo riders are self-employed.

What does this mean?

The Court of Appeal confirmed a lower instance decision that Deliveroo riders are not employed by the company. The question initially landed in front of the High Court after the Independent Workers’ Union of Great Britain tried to obtain ‘collective bargaining rights’ for Deliveroo riders. These are usually only available to employees under UK labour law.

This judgment follows two previous High Court decisions and one Central Arbitration Committee decision. It comes as a massive blow to Deliveroo riders, who have far fewer rights being self-employed than they would as employees, including the right to minimum wage or paid holiday. However, the decision is welcome news for Deliveroo. When going public earlier this year (i.e., offering its shares to the public for the first time), demand was limited due to the prospect of litigation over precisely this issue.

What's the big picture effect?

Deliveroo’s share price increased by almost 11% since the decision. However, it is not the only one who benefits. Deliveroo is one of many companies forming part of the gig economy, which revolves around short-term contracts or freelance work, often involving online platforms. Companies with similar business models may thus also benefit from the decision.

 Nevertheless, a lot will depend on the types of contracts that ‘gig economy’ companies enter into with those who work for them. Not too long ago, Uber was at the centre of this debate. In February 2021, the Supreme Court confirmed that Uber drivers were workers, contrasting with the Supreme Court of New York’s decision earlier this year that Uber drivers are employees. However, if the Deliveroo matter were appealed to the Supreme Court, the outcome might well be different. During the Uber saga, the lower court and the Court of Appeal found in favour of the drivers. In this case, however, Deliveroo has succeeded in both those instances. This is in part because Uber drivers’ contracts constrained them in a manner similar to employees, whereas Deliveroo riders’ agreements contain certain freedoms atypical for workers.

 The Court of Appeal’s Deliveroo decision is highly relevant for lawyers. Clearly, those working within employment law are most likely to be directly affected, but they will not be the only ones. Deliveroo’s IPO (initial public offering, the first time a company offers shares to the public) showed the impact that uncertainties about employment structures can have on a company’s share price. This makes it a matter that lawyers working within corporate finance, notably Equity Capital Markets, should be aware of. More generally, the gig economy is disrupting the labour market as we know it. In light of COVID-19, virtual and flexible working is becoming increasingly common. A sound understanding of how this may impact the wider economy and thus clients across a variety of industries will be a core part of commercial awareness in future.

Report written by Isabel Lightbody

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