Deliveroo claims it was an economic ‘lifeline’ during the pandemic and shouldn’t have to pay minimum wage

Deliveroo Photo by Matthew Horwood/Getty Images

Deliveroo has warned it would be forced to reduce the size of its workforce if it had to engage its riders as employees with minimum conditions, after operating as a major source of jobs during the pandemic.

The food delivery company, which engages about 8000 riders as independent contractors, has told Labor’s new Senate inquiry into job security that it had acted as a “significant lifeline” for workers and business during the height of the coronavirus crisis.

However, it said proposals for gig workers to have employee-like minimum pay and conditions would be “incompatible with on-demand work” and likely require it to introduce set shifts, resulting in fewer riders on the road.

The food delivery company joined Uber to use the Senate inquiry, chaired by Labor MP and former Transport Workers Union head Tony Sheldon, to push for a new industrial relations framework that would allow the sector to provide benefits like paid sick leave and training, but without running the risk of classifying riders as employees.

Deliveroo said its rider applications had more than doubled during the pandemic from 700 a week to 1700 and a study showed that Deliveroo, Uber and other similar companies supported 38,000 jobs at the height of lockdowns from April to June 2020.

However, its submission said under the current system paid sick leave or annual leave had to be calculated on an employees’ ordinary hours of work, when Deliveroo riders enjoyed not having to work specific times.

Riders’ tendency to work for competitors simultaneously, known as “multi-apping”, also made it unclear which company would be liable for the payments.

Even engaging them as casuals, without entitlements to leave, would still require an hourly pay rate that would in turn require minimum shift lengths and scheduled rosters, which would “limit the supply of riders during those hours”.

“Should riders be reclassified as employees, it is likely that Deliveroo would work with fewer riders on the road who, unlike now, would operate in fixed shifts,” it said.

“This would be bad for the students, carers and others who supplement their income with delivery work, as it would mean employing a different cohort of riders; it would be bad for customers, who would be denied choice and speed as a result of fewer drivers being on the road; and bad for restaurants, who would see lower revenue growth from deliveries through the Deliveroo platform.”

Opposition leader Anthony Albanese has promised that if elected he will legislate so the Fair Work Commission can make orders for minimum pay and conditions for “employee-like forms of work” to crack down on insecure work.

But the “gig” company said it “respectfully disagrees that the opportunities Deliveroo provides to riders are insecure or precarious”.

“Deliveroo provides self-employed people with opportunities to complete the delivery of orders of food at times suited to them, their other work or responsibilities, and lifestyle priorities. That is, it is flexible work as opposed to being insecure or precarious.”

Hire-Up, an online platform for NDIS workers, pointed out that it engaged its thousands of workers as casual employees and argued for changes to the system that it said encouraged insecure contracting over employment.

It said of the eight newly established companies offering support workers through online platforms, Hire-Up was the only one to engage staff as employees and awards needed to change so everyone played “by the same rules”.

“The complexity and rigidity of unreformed labour regulation for employers is dissuading newcomers to the disability sector from becoming employers in the first place,” its submission said.

Senator Sheldon, who said the inquiry would delve into the claims, argued “platform companies continue to peddle this convenient fiction that Australia has to choose between workers having rights and having a job”.

“It is also a furphy that contractors can’t have rights as well, because there is bipartisan support for owner drivers in NSW having bargaining rights, for example.”