When 21-year-old Nathaniel Shaughnessy needed to find flexible paid work, he took a courier job with fast-food delivery firm Deliveroo, and for two years biked take-away meals from restaurants to customers. In February, the Deliveroo-branded food box that clipped to the back of his bike snapped off and he was given a second-hand backpack with a broken zip as a replacement. He was told that he would have to wait until September for a new one, but when the time came to collect it, he learned that the rules had changed and workers are expected to fund replacements themselves. Under the new policy recruits are expected to pay for everything at the outset. A backpack and insulating bag cost £60.

“If anyone’s equipment breaks after six months they are expected to work the equivalent of the next 13 deliveries for nothing, just for the privilege of having the kit to do the job,” says Shaughnessy. “I can only imagine what this must be like for those for whom Deliveroo is their primary source of income.”

Shaughnessy’s grievance echoes that of dozens of other riders who claim the company’s practices deprive them of basic rights. Riders are classed as self-employed contractors who are not entitled to protections granted to employees and “workers” – the latter being an employment classification that carries the right to the national minimum wage, union recognition and holiday pay.

Last week, a tribunal ruled that Deliveroo riders in north London were not entitled to basic employment rights because they are not “workers”. The case was brought in May by the Independent Workers Union of Great Britain (IWGB) to force the firm to accept the collective bargaining rights of its members. But in its ruling, the Central Arbitration Committee, which oversees collective bargaining law, concluded that Deliveroo couriers are self-employed because they have a right to ask a substitute to perform a job for them. By law, anyone with the right to do this is classed as self-employed, and self-employed workers aren’t entitled to collective bargaining rights.

Critics claim Deliveroo manipulated the system to duck its liabilities. It changed its contract to include this crucial “substitution clause” just 11 days before the CAC hearing. The company says that it regularly updates its contracts “to ensure that they reflect the reality of how riders work”.

But Annie Powell, a solicitor at Leigh Day which launched the latest legal challenge, says: “We argue that the only reason they brought in the new contract was to defeat the union’s case. The ‘substitute rule’ means that even if you don’t want, or plan, to appoint anyone else to cover for you, the fact that the clause exists in a contract means you count as self-employed and lose basic rights. The law needs to change.”

The charges for essential kit were added to the contract at the same time. Again, Deliveroo insists this was to benefit its couriers who can now use non-branded items, allowing them to work for other companies between jobs. “They only buy what they need, so if they already have protective clothing, lights and helmet, they only have to buy the backpack and thermal bag,” it says.

They routinely exercise unilateral control to change the terms on which they engage the workforce Jim Benfield, Deliveroo rider

The union has described the treatment, as evidenced by Shaughnessy, as callous and disrespectful. “They routinely exercise unilateral control to change the terms on which they engage their workforce,” says Jim Benfield, a Deliveroo rider and secretary of the Courier and Logistics branch of the IWGB.

Shaughnessy claims that riders are often unable to earn their dues because regular app outages prevent them from signing on for assigned shifts; the driver support team is frequently uncontactable; and payments are often miscalculated in Deliveroo’s favour. “There have been times when I’ve worked four shifts in a week doing over 20 deliveries and received the pay equivalent for less than one shift,” he says. Payments often have to be challenged after being miscalculated.

The new requirement for workers to purchase mandatory equipment was the last straw for Shaughnessy who quit rather than fork out.

Another policy change, introduced last month, means that riders on hourly rates can no longer work the same ongoing shift patterns to guarantee an income. Instead, they have to compete for available hours at the start of each week with those Deliveroo classes as “high performing” and who have priority. Hours are also now capped at 55 a week. Deliveroo says the change is in response to rider feedback. “It provides greater certainty over earnings by accurately matching rider supply with customer demand,” it says. “Riders can book sessions in advance, cancel at any time or choose to turn up at the last minute.”

Riders, however, claim that the cap and the unpredictability has left them out of pocket. Sergio Ramos, a rider in London, reckons he has lost £125 a week. “I used to work 10 hours a day, seven days a week,” he says. “Now I’m not allowed to block book more than 55.”

“Block bookings” are those made on the day that available hours for the following week are released – and the cap only applies to them. Riders can top up more sessions after that, but there is no guarantee any will be left.

Deliveroo drivers who work shifts are paid £6 an hour (£7 in London) plus £1 a delivery. Those who prefer to work ad hoc earn £3.75 per delivery rising to £4.50 in rural areas. The minimum wage for over-25s is £7.50, excluding expenses.

“Out of that money I have to pay for motorbike maintenance and equipment and £1,300 a year for courier insurance,” says Ramos, 40, who has four young children and reckons he’s left with £7.50 an hour before tax. “Last year I broke my hip while on a delivery and was off work for eight weeks with no income.”

Annie Powell says that some of her clients earn “substantially” less than the minimum wage. “One was more than £500 below the threshold for two months’ work,” she says. “Our argument is that these riders are controlled, managed and disciplined by Deliveroo and clearly do not carry out their own delivery businesses, as Deliveroo argues.”

Deliveroo says that average hourly earnings work out at £9.50 and that if the app, which details available jobs, stops working, riders on hourly pay are credited with the equivalent of 2.5 deliveries. It claims its workforce would be deprived of vital autonomy if it was given employment status as “85% of riders say that flexibility is what they value most”.

It adds: “This enables them to work when and where they want, and for how long they want. We want employment law to be updated to allow us to offer riders benefits such as sick and injury pay, without limiting the flexibility they value.”

The need for new legislation is a “fiction” according to a parliamentary review, which concluded that profit – not flexibility – is the motive for using a self-employed workforce.

The 21st-century phenomenon of the “gig economy” has, critics claim, undone a century of progress and reintroduced sweatshop conditions. The IWGB had hoped that a tribunal ruling forcing Deliveroo to recognise union membership, would haul it into the new millennium.

Last week that hope proved a forlorn one. But experts reckon the CAC ruling should not affect the latest legal challenge for fair pay. They can take heart from Uber’s recent defeat in a similar case brought by its drivers.

FOR AND AGAINST SHORT-TERM WORK

The so-called “gig economy” is a sector which relies on short-term contracts or freelancers. Instead of a regular salary, those who work in it get paid per job – or gig. Classed as independent contractors, they are not entitled to the national minimum wage or sickness, holiday or redundancy pay, and don’t have guaranteed working hours.

Supporters claim it allows people to choose their own working patterns, while businesses are spared statutory staff overheads. An estimated five million people work this way, and the Office of Budget Responsibility forecasts that in 2020-21 it will cost £3.5bn in lost taxes.

A government-sponsored review has recommended that firms with a “controlling and supervisory” relationship with workers, such as Uber and Deliveroo, should have to pay a full range of benefits, including national insurance contributions.

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