Uber and Deliveroo might have to radically alter the way they pay workers following a UK government report

Deliveroo protest gig economy londonJonathan Brady/PA Archive/PA ImagesDeliveroo riders hold a protest over pay outside the company HQ in Torrington Place, London, in August 2016.

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.

The report is out on Tuesday, but key details such as the “piece rate” minimum wage recommendation have leaked to the press.

According to The Financial Times, this means gig economy firms need to demonstrate they can pay considerably more than the minimum wage at times of high demand. Confusingly, it also means they don’t have to guarantee the minimum wage if workers log in at times of low demand — but they do need to warn workers about this in advance.

Not guaranteeing the minimum wage is likely to disappoint Uber drivers and Deliveroo riders who campaigned for a blanket minimum wage.

These are some of the crucial changes expected in the report:

  • The minimum wage on a “piece rate” basis
  • A new legal “dependent contractor” status, meaning gig economy rights as workers are clearer in law
  • This potentially means entitlement to holiday pay and sick pay

Uber and Deliveroo rely on cheap labour to work

If the report’s recommendations become law, it will alter how Uber, Deliveroo, and any firm relying on casual workers does business. And it might mean their prices go up.

Here’s why:

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 categorise these workers as self-employed. The companies don’t need to 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 promoted 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 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.

This is a developing story…

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