Entertainment Food

Deliveroo’s ‘flexible’ labor model likened to 20th century dockyards

A report into the pay and conditions for riders delivering food for gig economy platform Deliveroo has urged the company to commit to offering a form of worker status to those riders who form the backbone of its workforce, arguing that the current reality is a dual labour market — which works very well for some riders but very poorly for others.

Far from Deliveroo’s model representing a hyper modern form of disruption, the report draws a parallel between the five-year-old startup’s ‘flexible work’ model and casual labor practices at British dockyards until the middle of the 20th century — “where workers would gather around the dock gate desperately hoping that they would be offered work”, and where only some workers were fortunate to be offered fairly regular shifts, while others were offered no work at all. 

From the report:

Such a system of casual employment could only work so long as there existed in every port a pool of surplus labour available to meet the demands of the port on its busiest day. According to Alan Bullock’s record of that period, the companies took full advantage of this, but refused to accept any responsibility for the fact that during most of the year a large number of the men forming the pool were underemployed.

Likewise, it seems, with Deliveroo, where, according to one rider, ‘riders on the advance booking times take most of the peak time slots blocking others from being able to increase their stats, often with little to nothing left to choose from.’

The inquiry was conducted by UK MP Frank Field who took evidence from 179 Deliveroo riders for the report — some put forward by the company itself, and some by unions.

For those riders who require greater stability and certainty in their work, Field is recommending that Deliveroo provides guarantee hourly pay rates of no less than the UK’s National Living Wage for all the time people are logged in and available for work — urging the company to recognize “the responsibilities they hold to those workers whose lives are made very difficult and insecure by both their existing rates of pay and working conditions, as well as the lack of alternative jobs to fit their circumstances”.

“A central question for both Deliveroo and the Government, before it decides on the shape of any new employment legislation, is how to safeguard the living standards of working people who need a reliable source of income but cannot find any work other than those jobs that, for one reason or another, risk plunging their earnings below the level of the National Living Wage. Both the market and the state are currently failing to deliver adequate pay and working conditions for this group of people,” he writes.

For those Deliveroo riders who prize flexibility and only wish to work a smaller number of hours — i.e. to suit their needs or wrap around other jobs — Field suggests they should be able to continue with the current model, which the report notes enables Deliveroo to “expand and contract its workforce when needed”. So he is also urging the government and the company preserve “the flexibility that so many riders have said they value” — recognizing that the gig economy is working for some, while arguing that it should not be at the expense of others.

Commenting on the findings in a statement, Field said: “The self-employed status and part-time nature of much gig economy work has given the labour market a flexibility that is still relatively new. Some of those workers who are keen to seize this opportunity view it as a short-term option while they develop their longer term earning power — setting up their own business, starting on an artistic career and the like.

“But for an unknown number of workers these imposed self-employment opportunities are all there is on offer, even though their need is for stable work for at least the level of the National Living Wage. It is this group that we are concerned about in this report and have been in each previous report we have published on the gig economy.”

The inquiry found that Deliveroo riders’ hourly pay ranges from £0 (nothing) to upwards of £20 — with average rates “tending to hover a little above, a little below, or at the level of the National Living Wage”. 

The lowest earnings reported to the inquiry included hourly amounts of nothing, £2, £3, £4.25, £5 and £6; while average earnings reported included hourly amounts of £5, £6, £6.83, £7, £8, £8.50, £9, £10, and £12; and the highest earnings reported included hourly amounts of £9, £10, £12.75, £15, £16, and £17.

Meanwhile, the company’s turnover increased from £16M in 2015, to £72M in 2016, while its global revenues increased over the same period from £18M, to £128M — and its net assets increased from £90M, to £168M.

A common ‘Catch 22’ style complaint raised by riders speaking to the inquiry relates to steps the company takes to control its workforce — which in turn appear to undermine its mooted ‘flexible work’ claim. Such as Deliveroo only allowing riders with the best delivery statistics to get first pick at booking shifts in advance (i.e. in the areas where it offers booking zones).

Riders who could not access first pick booking told the inquiry they were typically left with few or no bookable shifts — yet without the guarantee of being able to carry out deliveries they found it hard or impossible to improve their Deliveroo statistics in the way required by the platform to unlock access to bookable shifts. Hence the Catch 22.

“You theoretically can work when you want, realistically there are no guaranteed hours and shifts are now very hard to come by,” one rider told the inquiry.

Unpredictable earnings was another commonly raised complaint, along with the fact that riders are not paid for the time they spend waiting for work — and some also reported being penalized by the platform when stuck waiting in traffic to pick up or make a delivery, or waiting for a restaurant to prepare the food .

One rider told the inquiry: “If I could [sum] up my relationship with Deliveroo it would be the transfer of risk from the company onto me […] I am only paid for my profitable activity. If there are no orders then I do not get paid, this costs Deliveroo nothing, the risk is on me not Deliveroo. A normal company would take that hit and continue to pay me.”

At the same time, the number of people riding for Deliveroo has grown exponentially — from 280 in 2014, to 4,186 in 2015, to 22,576 in 2016, and to 37,773 in 2017. While so far this year 32,166 people have ridden for the company, with approximately 60 per cent based in London and the South East, according to the report.

Field concludes there is a need for the government to reform employment law, and enforce it “much more robustly, with the objective of introducing greater security for workers without compromising the flexibility of their work”.

“Our key recommendation to the Department for Business, Energy and Industrial Strategy is to enshrine in legislation the principle that anyone who is both logged into platforms like Deliveroo and readily available for work should be paid no less than the National Living Wage for those periods of time,” he writes.

“Alongside this reform, we call on the Department to ensure that the Director of Labour Market Enforcement is adequately resourced, and given additional powers where necessary, to enforce all aspects of employment law, in both letter and spirit, that relate to vulnerable workers.”

While Deliveroo has said it welcomes Field recognizing “the benefits that working in the gig economy can bring” the company has rejected his recommendations — arguing the changes he suggests would “remove the flexibility that riders value”.

It also claims his report contains “a number of claims that are incorrect and overlooks the extent to which riders value flexible working” — rejecting, for example, the accusation that the platform deliberately maintains an oversupply of riders and thereby puts rider earnings at risk.

In a statement responding to the report, a company spokesperson told us:

Deliveroo is proud to offer flexible well-paid work where riders on average earn well over £10 an hour, well above the National Living Wage.

In the modern economy people want to fit their work around their lives, not the other way round. This is why working with Deliveroo is so popular as it gives riders total flexibility. Riders choose how much they want to work and when, and are very clear they want to protect the flexibility that self-employment provides.

Deliveroo believes more can be done to increase the security for riders while protecting their ability to be their own bosses, which is why we have introduced free, market-leading insurance for all, covering riders in case anything goes wrong.

But we want to go further, and have called on the Government to update employment rules to end the trade-off between flexibility and security and enable platforms to offer riders even more benefits without putting their employment status at risk.

The UK government is currently consulting on a package of labor market reforms intended to expand rights to millions of workers, with the reforms intended to respond to changing working patterns driven by the rise of so-called gig economy platforms — following rising political pressure over precarious work and unsafe conditions for the people whose labor underpins the gig economy.

At the same time, a series of UK court and employment tribunal rulings in recent years have also bolstered the case against gig economy platforms as being predicated on exploitation of a workforce via circumvention of workers’ rights.

Uber continues to appeal (so far unsuccessfully) against a 2016 employment tribunal ruling which found that a group of Uber drivers were in fact workers and therefore entitled to rights such as holiday and sick pay.

While last month the UK Supreme Court backed a similar workers’ rights case brought against Pimlico Plumbers.

Also last month a group of couriers who had been defined as self-employed by the delivery company Hermes won their employment tribunal fight to be classed as workers.

Deliveroo has had more success at fending off employment classification challenges — although last month the UK High Court granted a union permission to challenge the company’s opposition to collective bargaining for its couriers on human rights grounds.

Last year the union challenged the company’s employment classification of couriers but a tribunal found they were independent contractors on the grounds that they had a genuine right to find a substitute to do their job for them.

Although the union disputes the sufficiency of the substitution clause in Deliveroo’s contract, and argues that rather than there being a trade-off between flexibility and worker rights in UK law — as the company has sought to claim — there is already an employment status that allows for both.

Deliveroo either fails to understand basic employment law or is trying to actively mislead the public,” said IWGB vice president Mags Dewhurst in a statement. “As has been established time and time again, under British law there is no trade-off between flexibility and worker rights. There is an employment status — ‘limb b workers’ — that allows for both and which Deliveroo has gone to great lengths to deny its riders, to the extent that we will now be facing the company in the High Court.”

On substitution, Field’s report notes: “We did not pick up from our evidence a great need or want among riders to use substitutes to cover their orders and Deliveroo was unable to tell us how many riders use substitutes.”

We also asked Deliveroo how many riders use substitutes but the company said it could not provide a figure — telling us: “Riders can freely engage substitutes to work on their behalf at any time, using their rider account, without needing to inform Deliveroo.”

Another of Field’s recommendations is for The Director of Labour Market Enforcement to conduct deep dives into sectors offering platform jobs — and report on “both levels of pay for different groups of workers as well as the reality of the self-employed status and the validity of each firm’s defence of that status, such as workers being able to substitute somebody else’s labour for their own and remain on the company’s books”.

We’ve reached out to the Department for Business, Energy and Industrial Strategy for a comment on the report recommendations and will update this story with any response.

Yesterday, ahead of the publication of Field’s report, Deliveroo sought to put its own spin on the findings — proposing in a newspaper article what it described as a “new Charter to allow companies to give greater security to the self-employed” by providing benefits to its workforce “without compromising their self-employment status”.

It argues that the manner in which benefits such as entitlement to annual leave are currently calculated for employees and workers is “not appropriate for the on-demand economy”. And its suggestion for the Charter is to make clear that such benefits “can be accrued on the basis of earnings rather than on hours or days work”.

​”This new proposition would both harness the desire for flexibility and address the need for more security, allowing on-demand companies to continue to prosper and make a significant contribution to the UK economy,” it adds.

See the full post at techcrunch.com

Leave a Comment