Deliveroo is to pay a six-figure bill to settle an employment rights battle brought by dozens of its riders, underlining continuing tensions over the treatment of so-called gig economy workers.
Sky News has learnt that the food delivery app has agreed to award 50 of its British couriers sums “in the low thousands of pounds” each to settle the claim before it was formally heard at an employment tribunal in London.
The settlement includes no admission of liability, according to a source close to Deliveroo, meaning that it is not expected to change the self-employed status of the company’s army of riders.
Brought by the law firm Leigh Day, the claim was one of a string of such cases which have brought into sharp focus the dividing lines between gig economy companies like Uber and their freelance workforces.
One insider familiar with the settlement said it would have “no direct impact on Deliveroo’s fleet of moped drivers and cyclists nor the company’s business model of using self-employed riders to deliver food”.
It is, however, thought to be the first such case that Deliveroo has agreed to make payments in relation to, following a victory for the company in a similar claim last year.
A source close to Deliveroo said the cost of the settlement was lower than the prospective legal costs to the company if the cases had run their course at the tribunal.
“The company will continue to focus on providing the well-paid, flexible work that riders value,” the source said.
“Courts have carefully considered Deliveroo’s model and concluded that riders working with the company are self-employed.”
The long-term legal landscape for the treatment of gig economy workers remains unclear, with the Supreme Court ruling earlier this month that a long-standing Pimlico Plumbers contractor was entitled to benefits such as holiday pay.
Image: Former Pimlico Plumbers employee Gary Smith at the Supreme Court
Experts said, however, that the case of Gary Smith was unlikely to set a precedent for workers at other companies such as Deliveroo and Uber.
Uber, the world’s most richly-valued ride-hailing app, has had mixed fortunes from a string of similar rulings.
The battle over employment rights has also underlined the disparity between the benefits enjoyed by full-time workers and contractors at some of the UK’s fastest-growing technology start-ups.
Will Shu, Deliveroo’s founder, recently announced that permanent workers would be handed stock options worth an average of £5,000 as the prelude to a stock market flotation.
The restaurant delivery app’s couriers, however, will not share in the windfall because of their self-employed status.
Deliveroo was valued at well over £1.5bn last year when it raised a new round of funding from the asset managers Fidelity and T Rowe Price.
Image: Uber has both won and lost similar cases against it
Bankers believe an initial public offering, which could take place in London or New York, is unlikely for at least 18 months.
In his note to staff, which was seen by Sky News, Mr Shu said he wanted “all of you to be owners”.
Mr Shu, an American who founded Deliveroo in 2013, has expanded it to a dozen countries and overseen explosive revenue growth as consumers increasingly turn to the convenience of home delivery services.
Rivals in the sector include UberEats and Just Eat, which has seen its London-listed shares perform strongly.
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Deliveroo partners with thousands of restaurants, including chains such as Wagamama and Nando’s, and takes a commission from each order that it fulfils.
Deliveroo declined to comment, while Leigh Day could not be reached.
Source: Sky