The restaurant food delivery start-up in London, deliveroo faced the dissatisfaction of its riders in the month of august. The company has introduced a new pay structure in the UK capital which did not satisfy its delivery agents. This sparked the strike against the company which ended with Dan Warne managing director of the firm for UK and Ireland apologizing.
This London based company is among the huge number of startups in on demand economy which has managed to gain a funding of around $1 billion. The company decided to alter its pay structure from £7 per hour and £1 per delivery to a system which pays £3.75 per delivery without any hourly compensation.
The company is actively present in 12 countries across Europe, Middles East and Asia. They tried to implement the new pay structure in five areas of London. However this led to condemnation from the riders, government and the opposition Labor party. The opposition accused the company of creating insecurities among the staff by trying to cut costs.
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The managing Director along with his apologies stated that if the riders are insecure about the new pay structure the company is comfortable to revert back to the old system.
The company began in 2013 delivering food for those restaurants that do not have their own delivery system. It competes with companies like justeats and Ubereats who operate as food delivery firms. Since the beginning delveroo riders have become a common sight in the London streets in their trademark mopeds or mostly in bikes.
The company has around 6,000 riders totally of which 3,000 are from London
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Change in pay structure and strike
The company changed its pay structure which according to the riders will lead to less earnings. However the company has stated that the new system of pay will give the riders the luxury to work whenever they need and not on hourly basis.
This led to the riders go on strike against the company and even gathering money through crowd funding to sustain them during the strike thus managing to gain around £8,000.
The UK government took to the riders’ side and stated that the company should pay the national minimum of 7.20 per hour unless the court of HM revenues and customs the riders as self employees.
The company has clearly defines all of its riders as independent contractors due to the flexibility given to the workforce.
Due to the continued protests of the riders the company has now given the choice to opt between the old and new model of pay structure. This choice is applicable only to the 5 locations in London; the places included influential ones such as West Hampstead and Belsize Park. Thus the option will be provided for around 250 drivers. The company said it came to this conclusion after having a talk with the 250 riders.
So the drivers who choose to work in the existing model are moved to work in new areas rather than the old ones. The company was criticized by IWGB for moving out the riders to new areas which makes it difficult for them to deliver and successively leading to pay cuts.
But the managing director has sharply answered the criticism the ride areas of London are very small (a maximum of 2.2 km per delivery) and with the aid of GPS technology it is not much of a difficulty.
The other criticism against the company for its new pay structure is it encourages haste among riders. They tend to drive faster to take up more rides.
The managing director said the old model of pay will be discontinued only if the workers unanimously opt out of the system. He also said that it was their fault of communicating poorly with the drivers.
Why the new pay structure?
The company obviously wants to cut down the cost of transporting the food. Most of these on demand companies are at present venture backed and are running on investors’ money. These are some of the steps taken by the company to move into profit mode.
Gig workers
This problem however is not new in the sharing or on demand companies. Many gig employees complain about the lack of guaranteed basic rights for them as they are considered as contact workers and not full time employees.
Governments are yet to come out of the 20th century industrial labor norms as they cannot be forced on the new age employees. The biggest concern for these employees they can be easily replaced there are lot of people ready to take up these side jobs for extra money. With so many people available to hire the companies take advantage out of it and reduce wages.
The classic example of this problem is Uber. Uber drivers are also considered as contact workers and therefore cannot expect any minimum wages. The company provides flexibility in working hours and places but it has certain standards which every driver should follow like cleanliness and age of the passengers they can pick up( un-supervised minors are not allowed). With so many restrictions drivers wanted to be stated as workers of Uber. When the case was moved to court room, uber settles the case outside the court by paying huge sums.
The companies do not want to take them as employees so that they need not adhere to minimum wages conditions and several other employee benefits. To avoid taking up them as employees Uber has avoided fingerprinting the drivers which compromises the riders’ safety. Finger prints create a situation that makes the company look like they have authority over the drivers which clearly the company does not want.
Gig workers from certain sector have also been requesting sick and paid leaves. They also do not have the right to form labor unions since they are not workers of any particular company. There is no guaranteed safety for their work environment. In case of drivers no one is sure about the kind of riders they may need to transport.
This shows to which extent the companies avoid taking up gig workers as full time employees. This is one of the ways through which the companies can cut down costs and compete with the traditional industries and gain market space. Most of these companies are startups currently burning the cash to gain some market. The high level of competition among the business houses is another reason to drive the prices down. There are startups cropping everyday in every city.
However one should not view the problem as one sided one with the workers as victims. To most of them these are just side jobs and come with great amount of flexibility which previously no industry offered them. Today there are so many companies in the market which offer these kinds of jobs.
Conclusion
Its high time governments across the world start forming rules which do justice for both the companies and the workers. Also the gig workers being independent workers they have to pay taxes which is over looked by most of them. In terms of the government it is also loss in taxes. The workers should also be made to realize that they should pay taxes.
Author Bio : Anand Rajendran is CEO and Co-Founder of Dectar, best PHP scripts development company located in India. Dectar is a part of Casperon Technologies a leading social and mobile development company which is Developing Uber for X apps like Couriero - On Demand Delivery Services App for the past 3 years. I’m a Tech geek, Digital marketing expert, Entrepreneur, and Atheist who loves to write everything about PHP Scripts and mobile application development.
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