The UK’s top court has ruled that Deliveroo riders cannot form unions or be recognised as employees in a landmark decision for the gig economy.
The Independent Workers’ Union of Great Britain (IWGB), which has the largest membership of app-based couriers in the UK, had fought the case in court for years, seeking to win formal collective bargaining rights for tens of thousands of Deliveroo riders.
UK supreme court justice Lady Rose said that since riders were able to choose another person to cover their deliveries without Deliveroo’s involvement, the contracts between riders and the company did not constitute an “employment relationship”.
The ability for riders to choose their own hours and work across delivery companies was another factor in the decision, she said.
“Deliveroo doesn’t object to riders working at the same time for Deliveroo’s competitors,” the judge added.
Deliveroo said it was a “positive judgment” for its riders “who value the flexibility that self-employed work offers”.
“Thousands apply each week to work with Deliveroo because they want to be able to decide for themselves when, where and whether to work,” it said. “We are proud to be able to offer tens of thousands of riders this flexibility alongside the security of free insurance, sickness coverage, support for new parents and a unique union recognition agreement.”
The IWGB described the ruling as a “disappointment”. “As a union, we cannot accept that thousands of riders should be working without key protections like the right to collective bargaining and we will continue to make that case using all avenues available to us, including considering our options under international law,” it said.
Yvonne Gallagher, partner at law firm Harbottle & Lewis, said the judgment was a “fundamentally important ruling for the gig economy, not just for Deliveroo” because of the so-called substitution clause in riders’ contracts – where they can choose other people to complete their orders.
“In establishing that the substitution clause works as a proof that riders cannot be considered workers, the Supreme Court ruling may give rise to other gig economy companies following the Deliveroo employment approach – where it fits their commercial model,” she added.
Deliveroo has yet to start generating positive free cash flow in the UK. Pretax losses at the company narrowed from £127.1 million in the first half of last year to £57.6 million (€66 million) in the first six months of 2023, as revenue grew 5 per cent to £1 billion. – Copyright The Financial Times Limited 2023
