Deliveroo judgment shows how gig economy platforms and courts are eroding workers’ rights

4 December 2023

The tide of employment law has continued to turn on the gig economy after the UK Supreme Court’s recent ruling that Deliveroo drivers are not considered workers but self-employed independent contractors.

This means people working in the gig economy are less likely to be able to access standard UK protections such as paid leave, rest breaks and the right to join a union. While some companies are negotiating private benefits like sick pay with gig workers, this risks fragmenting universal provision of social and employment protections.

The recent ruling was made after an appeal by union the Independent Workers’ of Great Britain (IWGB) to the government’s Central Arbitration Committee decision that Deliveroo did not have to recognise the IWGB as a representative for Deliveroo workers. The Supreme Court judgment referred to the ability of Deliveroo workers to use substitutes to carry out their tasks as a reason for its decision that they are self-employed. Also, that they can reject jobs and work for competitors. In other words, the court is pitting increased flexibility against core employment rights.

This landmark judgment will almost certainly shape outcomes in similar cases for years to come.

Fighting to gain ‘worker’ status

At the heart of these legal proceedings is the union’s fight to gain “Limb (b) (worker) status” for Deliveroo drivers. This status was created by two pieces of legislation: the Employment Rights Act 1996 and the Trade Union and Labour Relations (Consolidation) Act 1992.

People making money in the gig economy have looser and more flexible relationships with employers, but they still don’t fit the traditional definition of “self-employment”.

In 2021, for example, the Supreme Court decided Uber drivers were workers rather than self-employed contractors. This was because – in contrast to the contracts drivers had signed – the actual conduct of Uber resembled that of an employer: setting wage rates, limiting contact between drivers and passengers, and allocating jobs and routes. As such, drivers were “subordinate to and dependent upon” the firm for their income, according to the court. This qualified them for limb (b) worker status.

But understandably, many gig workers still want core social and employment protections such as paid leave, rest breaks, and the right to join a union, to be embedded in law. By finding that Deliveroo riders do not qualify for worker status, the courts have excluded them from these rights. This is despite a recent investigation finding that one in three riders earned less than the national minimum wage, with some working 80-hour weeks just to stay afloat.

“We have for a long time advocated for self-employed workers to be provided with greater protection,” a spokesperson for Deliveroo says of the judgment. They add that the company also provides free insurance and sickness cover, and struck a self-employment recognition agreement with the GMB union in 2022.

A privatised patchwork of protections

Accident and liability insurance, limited sick pay and lump sum payments to new parents all sound like progress for gig economy workers. But the court’s recent decision, and Deliveroo’s response, reinforces the growing trend for gig economy platforms to take a “pick-and-choose” attitude to social and employment protections.

Our research shows digital platforms increasingly have their cake and eat it in this area. These firms often engage labourers as self-employed contractors, rather than workers or employees, while providing a patchwork of privatised social and employment protections. These protections are not backed by employment law, they are simply contractual agreements among business enterprises.

Courier firm Evri (previously Hermes) is something of a pioneer in this regard. In 2018, a Leeds employment tribunal found a group of Hermes couriers to be workers, not independent contractors. This meant they were entitled to the minimum wage, paid leave and other social and employment protections.

The case was brought on the couriers’ behalf by the GMB union. Rather than making further claims against the company or risking a costly appeals process, the GMB and Hermes struck a deal in 2019. They agreed the self-employed status of Hermes’ (at the time) 15,000 drivers would remain, but with benefits similar (but not equivalent) to worker status. This included algorithmically generated payment top-ups to ensure couriers earn equivalent to the national minimum wage, a system for organising delivery cover to make paid annual leave possible and, subsequently, parental leave and pensions.

“We are proud of the Self Employed Plus deal we agreed with the GMB in 2019,” a spokesperson for Evri says, adding that it provides couriers with stability and flexibility. “Each quarter, we have planned discussions on the deal, and this has resulted in several enhancements including a new opt-in pension scheme, parental leave and a fuel supplement.”

Such agreements help firms retain workers and avoid churn, while protecting them from further legal action over employment status. At the same time, the firm can leverage the tax and flexibility benefits of using self-employed workers. Couriers, however, continue to bear the costs of their employment status in other ways, such as remaining liable for soaring fuel and equipment costs. Some drivers have said fuel supplements are not enough.

Slowly eroding worker protections

Deliveroo and Evri are not alone, many platforms offer various forms of privatised social and employment protections. And as this type of platform work continues to grow, privatised social and employment protection provision could grow along with it. The UK’s universal coverage model could be eroded by a variety of intermediary employment statuses with inconsistent levels of worker protections.

The Conservative party’s proposed employment bill has been subject to endless delays, while Labour appears to be wavering on its commitment to reform the employment law system in favour of a presumption of employment status. In the meantime, the protections that workers could once take for granted will continue to come under duress.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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