Riders are not in an ‘employment relationship’, the court has ruled

A seven-year legal battle between Deliveroo and the Independent Workers’ Union of Great Britain (IWGB) ended last week with a Supreme Court decision that riders are not in an “employment relationship”.

Delivery riders’ ability to appoint substitutes to work on their behalf was key to the judges’ decision.

The ruling brought “welcome certainty for platform economy companies”, Deliveroo’s lawyer said, and a “conclusion” to any argument riders are employees. But is it truly case closed on a business risk that has hung over Deliveroo and its rivals for years? Much is at stake if not.

Deliveroo will hope so. It would be “adversely affected” if its approach to rider status was “successfully challenged”, it said in its latest results. The impact so great, in its 2021 IPO prospectus Deliveroo revealed it had set aside more than £112m to cover legal costs defending the position in five countries.

And it’s not just Deliveroo. The Supreme Court decision is also “a fundamentally important ruling for the gig economy”, says Yvonne Gallagher, partner at Harbottle & Lewis.

But the IWGB has not given up. Indeed, the judgment means the union – free from turnout and balloting requirements – can continue to organise wildcat strikes. It has hinted it will, saying: “Our strength lies not in court rulings but in our unity as a workforce coming together to demand change.”

Meanwhile, legal uncertainty for Deliveroo still looms large across Europe.

The EU published plans to regulate the gig economy in 2021, to “ensure that people working through digital labour platforms can enjoy the labour rights and social benefits they are entitled to”. In June this year, EU member states reached a deal on draft rules to stamp out the “bogus self-employment” of gig workers, which will now be negotiated before being written into the national law of each state.

The draft rules as they stand somewhat hazily state the ability to appoint substitutes is “characteristic of genuine self-employment, while not proving it per se”.

However, the EU is proposing some additional statutory tests of worker/employee status “where it is clear that the platform provider can control earnings and freedom to undertake other roles”, explains Gallagher.

Deliveroo rider

Deliveroo would be ‘adversely affected’ if its approach to rider status was challenged, it said in its latest financial results

The impact will be significant. Spain in 2021 ratified its own ‘Riders Law’ that “provides a legal presumption of a dependent employment relationship” between rider and platform.

While courier platform Glovo allegedly flouted the law (and has been fined for doing so), Uber Eats initially complied (hiring riders exclusively through subcontractors), then didn’t. It is now “exploring a new model” that it claims will be within regulations. Just Eat have stuck with the letter of the law.

Deliveroo, though, decided to exit Spain completely. While the law wasn’t a determining factor, the company claims, it had resulted in an earlier withdrawal than previously intended. It also left the Netherlands last year, and faces ongoing litigation there, after a March ruling by its Supreme Court that its riders are employees.

The IWGB says it is “considering our options under international law” to continue the case.

An even more immediate risk is whether a new UK government would prompt another look at worker rights.

Labour had been planning a single “worker” status for all but the genuinely self-employed, but has partly rowed back on its initial pledge in favour of “a simpler framework” and more pro-business approach.

Labour deputy leader Angela Rayner in August denied “watering down” the policy.

“It seems that for [Keir] Starmer it’s more important to appear as deferential as possible to corporate interests than to tackle systemic economic injustices which have mushroomed over 14 years of Conservative rule,” says The Gig Economy Project co-ordinator Ben Wray.

So Deliveroo’s lobbying efforts appear to have paid off, having sponsored a Labour conference event for the past two years. Nevertheless, says Gallagher, “sector-based collective bargaining is supported [by Labour] so this may enhance [the] rights of delivery workers”.


Home Office pressure

Neither is the current government giving courier platforms a completely free pass. Earlier this month, the Home Office urged food delivery companies to end the practice of unchecked account sharing. For now it is down to the rider sharing their account to ensure the substitute can legally do work, but that could change.

The platforms “will now be working out how to strengthen automated ID checks just enough to satisfy the Home Office, but not quite enough so that the courts believe the substitution clause is no longer ‘broad and virtually unfettered’,” says Wray. “What’s really ironic, is the Supreme Court has unwittingly protected a digital black market,” he adds.

The biggest threat to gig operators, however, might be the rise in the minimum wage to £11.44 per hour from April next year. It “puts pressure on companies not directly bound by the law as they may lose workers to sectors that do match minimum wage,” says Gallagher.

With research by NimbleFins finding the average Deliveroo rider earnings to be between £7 and £12 per hour, many might be drawn to more secure employment.