A grocery delivery courier puts a bag of groceries on the back of his bike as he prepares to deliver an order from Deliveroo in London.
Simon Dawson | Bloomberg via Getty Images
On its stock market debut, UK grocery shipping company Deliveroo saw its share price fall around 30% as questions arose about workers’ rights for its drivers.
In the days leading up to the listing, the company revised its share price as some investors decided to avoid going public because of these concerns.
Deliveroo is just one example of a broader “gig economy” that is increasingly being scrutinized. In the past few weeks, the industry has been rocked by a series of court rulings and regulatory actions across Europe that could ultimately change the business model.
Uber’s loss to the UK Supreme Court last month forced the company to classify 70,000 of its UK drivers as employees, allowing them a minimum wage, paid vacation time and retirement plans.
In Spain, lawmakers have put in place a number of measures aimed at classifying gig workers as employees with formal contracts and benefits.
Meanwhile, the European Commission, the executive branch of the EU, is proposing plans for regional reform of workers in the gig economy, their status and their rights.
James Farrar of the Drivers and Couriers Union app, who negotiated the case against Uber in the UK, said there was an “early triumph” but it was only the beginning of a turning point in gig economy workers’ rights.
“We’re still grabbing the bottom rung here and we’re not there yet,” he told CNBC.
“I think what really mattered about the Supreme Court ruling is that it left room for other claims across the gig economy to succeed.”
Prepare for change
Other companies are preparing for change in some form, whether through regulation or at their own request in advance.
Just Eat Takeaway, Europe’s largest online grocery delivery company, is putting its Just Eat deliverers under employment contracts. Before the companies merged, the drivers of the original company called Takeaway.com had such contracts.
“As part of this model, couriers are entitled to an hourly wage. They are paid above the minimum wage that comes with labor insurance and social security under local legislation,” a spokesman said, adding that couriers are equipped with equipment such as bicycles.
In the case of Spain, operators in the market like Glovo are waiting to see exactly how the legislation will work and how to react.
Co-founder Sacha Michaud is not a fan of the path taken by Spanish lawmakers.
“It’s a pretty strict regulation, probably the strictest (in Europe) so it’s a pretty radical position in the sense that it allows very little flexibility, which is one of the things that we obviously adhere to and the drivers are calling for this as well, “Michaud told CNBC.
Michaud said Glovo will “obviously align” with the regulation once it is in place, but the company tends to advocate a balance between flexibility of workers and the provision of benefits and security while avoiding the employment mark.
He added that surveys of Glovo’s drivers showed that most would prefer a flexible model to more rigorous employment. He said this will help a lot of drivers who might be working for gig platforms between their studies or other jobs.
“It should be social rights, yes, and see how we can maintain flexible working conditions under these conditions. It doesn’t necessarily have to be black or white.”
That middle ground harks back to Prop 22 in California, which passed last November and is backed by Uber and Lyft.
It’s an approach that Uber would like to repeat in Europe. In February, CEO Dara Khosrowshahi published a paper calling on the European Commission to follow the mixed model like that of California.
Changes in the regulatory status of workers will bring a number of new costs. This also applies to smaller start-ups in the area.
John Ryan of UK start-up Gigable, which links restaurants and other businesses to freelancers, said consumers might end up feeling the brunt of the price hikes.
“But I think people are comfortable with price increases knowing that the drivers are doing it or there is public support for the move, but that remains to be seen,” said Ryan.
He added that the flexible model might work for some workers and others would prefer traditional employment.
“We’ll see how difficult it is for people to make commitments.”
Contracts and worker status are only one front in this struggle, according to Farrar of the ADCU.
His organization also pursues initiatives related to driver access to data that companies have and what he calls “algorithmic control”.
“We are seeing an arms race in the surveillance of workers in the gig economy and that is creating problems,” he said.
The ADCU supports two London drivers in a case they take up in the Netherlands against the Indian hail-fighting company Ola. The drivers are looking for access to data that the company has on them according to the EU’s comprehensive GDPR rules that they have been denied.
Farrar said technology like AI for monitoring a driver’s performance and determining how much work they’re getting is a red flag. The group also urges Uber to stop using facial recognition to screen drivers.
The discussion about regulations, including at EU level, is heavily focused on employment status, Farrar said, but the debate needs to become more nuanced in terms of algorithms.
“I think it has been overlooked everywhere so far, but we will certainly bring the issue up,” he said.
“Regulators and policymakers are often catching up on this and not beyond.”