Deliveroo: When is self-employment not actually self-employment?

Gig economy companies are blurring the lines between workers and contractors. Businesses need more clarity.

by Jack Torrance
Last Updated: 17 Aug 2016

MT paid a visit to the picket line outside Deliveroo’s offices yesterday. It wasn’t the largest of protests the world has ever seen, nor the loudest, but few companies enjoy the idea of being caught up in industrial action – least of all the bad publicity that comes with it (and being one of London's hottest start-ups it has attracted plenty of coverage). 

Deliveroo drivers picketed the company's HQ

Drivers began to kick off last week after the takeaway delivery company decided to trial a new payment model. Instead of being paid a fixed wage of £7 per hour plus £1 commission per drop, drivers were offered a simple £3.75 per delivery. Deliveroo says that means drivers are likely to earn more, but some disagree. In particular strikers worry that they could make no money at all during less busy hours.

Deliveroo was forced to concede some ground over the weekend after it was reprimanded by the government, no less. ‘Employers cannot simply opt out of the [national living wage] by defining their staff as self-employed,’ a spokesperson for the new Business, Energy & Industrial Strategy department told the Guardian. But that’s exactly what many employers have been doing, and there’s a real lack of clarity in the law as it stands about whom exactly can and can’t be considered to be self-employed.

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There are actually three main types of employment status: proper ‘employees’, who enjoy the widest range of protections, ‘workers’, who may be on flexible or temporary contracts and have fewer rights, and the self-employed. It’s the line between the last two that has been blurred in recent years as companies have been keen to keep costs low and be as flexible as possible.

There is no definitive way to telling them apart, says Tom Stenner-Evans, senior associate in the Employment team at Michelmores. But it’s certainly true that just getting a worker to agree they are happy to be hired on a self-employed basis isn’t good enough.

Drivers urged customers to boycott 

‘There are certain requirements for [it to be considered] employment and if all of those boxes are ticked, it’s much more likely it’s an employment relationship, even if the parties have agreed it’s self-employment,’ he says. There are three key factors that determine whether somebody is actually self-employed or not.

  • Personal service. ‘In an employment relationship there’s an expectation on the individual providing the service themself,’ says Stenner-Evans. If workers have to show up themselves to do a job then they could be employed.
  • Mutuality of obligation. ‘There’s an expectation on the part of the organisation to provide work and an expectation on the part of the individual that if work is provided they will do it,’ he says. Genuine self-employed people have every right to turn down work they don’t want.
  • An element of control. ‘Someone in a supervisory role to whom you report.’ The self-employed should be their own boss.

Of course all of these things are pretty vague and it will ultimately up to a court to decide what does and doesn’t constitute control or mutuality of obligation. As of last night Deliveroo seems to have reached an agreement with its drivers, who are claiming victory after it pledged not to force anybody to take on the new contract.

But this won’t be the last time this issue raises its head and businesses need more clarity from the government as to what should actually constitute an employee. In the mean time, companies that choose to operate in this grey area risk legal action and a public shaming.


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