You’ve no doubt heard about the food delivery company called Deliveroo, but lately they have been making the headlines for all the wrong reasons.
In a landmark case the UK government have ordered the company to reshuffle the employment status of its workers, which means they will have to start paying them minimum wage with employee benefits.
Up until this point the vast majority of Deliveroo couriers have been labelled as “self employed” or “contractors,” and this is something the company still say is the right classification as they are basically working for themselves.
However, leading government officials have branded the working conditions and pay scale as “Victorian,” saying that plans to pay couriers per delivery rather than by the hour just isn’t on.
Right now, the national minimum wage in the UK is £7.20 per hour, so if Deliveroo couriers are seen as employees rather than self employed, this will be a starting salary for the workforce. Of course, there will be other benefits on top of that base amount, as well as more per hour for employees that take on supervisor roles and the like.
My verdict? I think this isn’t such a clear case as the government are making it out to be, mainly because once Deliveroo couriers do become employed then they are limited to the amount of money they can earn, whereas if they are paid for each delivery it would be possible to potentially make over £10 an hour or more.
Some couriers will prefer to be employed while others would no doubt enjoy the freedom of self employment or a contracting type role, which ultimately means it is hard to say what is the best (and right) way forward.
It is said that under the current pay model where couriers are self employed, the average pay is around £9 per hour, although it is entirely possible for them to make up to £25 per hour during busy times and with the right delivery route.
There is also the point of whether or not the Deliveroo business model will work as effectively once they have a work force of employees rather than self employed agents.
In other words, will their profits take a hit and will their competition be able to use this to their advantage? Only time can answer that question I suppose, but my initial reaction is that other food courier companies out there could take away some market share.
What is interesting about this case is that it could signal a significant slowdown of businesses in many industries hiring workers on a self employed and contractor basis, and instead, they may just look to hire employees right from the start. Let’s wait to see how this all turns out.