- Jonathan Brady/PA Archive/PA Images
Uber and Deliveroo may have to radically change the way they do business in the UK, after a government-commissioned report demanded they guarantee the minimum wage at certain times.
The Taylor review was commissioned by Prime Minister Theresa May last year partly to examine how “gig economy” firms like Deliveroo and Uber treat their workers. It also looks at other employment issues like zero-hour contracts.
The term gig economy loosely refers to the rising number of firms that rely on more casual than full-time workers, who often take work via smartphone apps. This doesn’t just mean Uber and Deliveroo, but the two firms have come under particular scrutiny over the way they treat workers.
These are some of the crucial changes suggested in the report:
- A change in the law to clarify what rights gig economy workers are entitled to: specifically, categorising gig economy workers as “dependent contractors” rather than “self-employed” or just “workers” Dependent contractors will have the same rights as workers – that should mean sick pay, holiday paid, and parental pay (but not parental leave) Minimum wage payments on a “piece rate” basis – this means that companies like Deliveroo have to guarantee its riders will earn above the minimum wage, provided they log in and carry out tasks at times of strong demand The piece rates rule means that the companies don’t have to guarantee minimum wage at all times Gig economy companies should use their massive amounts of data to tell workers when they can earn more
A major win for the likes of Uber and Deliveroo is that the report doesn’t recommend they pay the minimum wage at all times. The two companies have both argued that, if forced to pay the minimum wage, they couldn’t offer workers flexible work. The increased costs could also feasibly put both out of business.
The report also doesn’t propose anything radical in terms of rights. An employment tribunal last year ruled that Uber drivers should be classified as workers, meaning they were entitled to benefits like holiday pay. Uber is appealing that ruling, though it isn’t clear what the company will continue that appeal if the law now changes. Deliveroo riders were weighing up a similar legal fight already.
Uber and Deliveroo rely on cheap labour to work
If the report’s recommendations become law, it will still alter how Uber, Deliveroo, and any firm relying on casual workers does business. And it might mean their prices go up.
For Uber or Deliveroo to deliver you food or a taxi cheaply and in a short timeframe requires lots of potential delivery drivers or taxi drivers.
To that end, both companies employ thousands of riders and drivers to be available just in case someone puts in an order. Deliveroo has said it has around 15,000 drivers in the UK. Uber doesn’t reveal numbers but, according to The Guardian, had 25,000 drivers in the UK last year.
These workers don’t work all the time, instead switching on the app whenever they can take on a job.
All of this cuts costs for Uber and Deliveroo, who have historically categorised these workers as independent contractors. That has meant they don’t pay benefits like holiday pay or parental leave. And they don’t need to guarantee the national living wage. That makes it easier to offer a cheap service.
But according to Labour MP Frank Field, whose series of reports on the gig economy prompted the Taylor report, this has created a subset of people who rely solely on Deliveroo, Uber, and other gig economy firms for their income. And they’re struggling to survive.
He told Business Insider in an interview ahead of the Taylor review: “For people who have other jobs, like delivering to Sainsbury’s, doing a few hours here and there [for a gig economy company] is a very good way to add overtime and extra income.
“It’s another story for those whose deliveries from one company is their only source of income, and who are forced into self-employment. They are bullied.”
Field said he was happy with the government’s progress on worker rights, and particularly with Taylor’s recommendation around dependent contractor status.
None of this is enshrined in law yet but it will add political pressure on gig economy firms to change how they pay workers.
Deliveroo has already changed its contract and suggested it will offer more benefits to riders due to political pressure. Uber has also started offering drivers financial advice and other benefits.
Uber said it’s not the first to use self-employed workers
In response to the report, Uber’s head of policy Andrew Byrne said using self-employed drivers predated Uber.
He added that most Uber drivers sign up because they like the flexibility of the app.
Here’s the statement in full:
“We welcome this report which looks at the rise in self-employment and new ways of working which predate apps like Uber. Indeed almost all taxi and private hire drivers have been self-employed for decades before our app existed.
“The main reason why people say they sign up to drive with Uber is so they can be their own boss. With our app drivers are totally free to choose if, when and where they drive with no shifts or minimum hours. We would welcome greater clarity in the law over different types of employment status.
“Drivers using Uber made average fares of £15 per hour last year after our service fee and, even after costs, the average driver took home well over the National Living Wage. We know drivers want more security too which is why we’re already investing in discounted illness and injury cover, and will be introducing further improvements soon.”
Deliveroo has not yet commented.