On Monday it was revealed that Deliveroo’s much-anticipated IPO projections would be cut by nearly £1billion – or 30% of the expected financial compensation – over concerns regarding the treatment of couriers.
According to reports by CNBC, several large-scale investors, including largest UK fund manager Legal and General Investment Management, alleged that they would be shunning the IPO on April 7 over concerns around workers’ rights within the organisation, and Deliveroo’s ongoing disagreements with its workers’ union.
Whilst Deliveroo was quick to comment that the alterations to share expectations were due to ‘market conditions’, the overall expected price is now in the bottom third of the ranges confirmed the previous week.
In addition to Legal and General Investment Management, the likes of Aberdeen Standard, M&G Investments and Aviva Investors have also expressed concern about Deliveroo’s worker rights after the Independent Worker’s Union for Great Britain noted that some Deliveroo riders could well be earning less than £2 an hour.
‘No excuse’ for mistreatment of workers
Commenting on the issue, TUC General Secretary Frances O’Grady said: “Deliveroo has no excuse for the way it treats its workers. It’s a damning indictment of the company’s exploitative business model that so many major funds have publicly shunned this float.
“And if the company thinks it can just cash in on this listing without improving working conditions, it should think again. Deliveroo will face greater scrutiny as a publicly listed company, and responsibilities to stakeholders. It needs to get start treating its workers decently,” O’Grady added.
However, Deliveroo disputes these claims, and told CNBC that it ‘treats its riders properly’ and gives them ‘the flexibility to work when they want’. It stated that riders earn an average of £13 per hour in peak times.
A Deliveroo Spokesperson told CNBC: “Deliveroo riders are self-employed because this gives them the freedom to choose when and where to work. We are confident in our business model, which has been upheld by U.K. courts three times, including the High Court twice.”
However, union IWGB stressed that workers would continue current strike action until a resolution was found to workers’ rights.
The issue has renewed interest in the current debate plaguing the entire food delivery sector over the status of workers and the gig economy.
Speaking on the subject, Kathleen Bada, Solicitor at LexLeyton, noted that Deliveroo may well be a sign of a rise in what she called ‘ethical investment’. “Regulatory risks loom over Deliveroo’s IPO. The company maintains its riders are self-employed, but cases involving other gig economy companies like Uber show that this is a difficult position to maintain. Investors who are reluctant to invest in Deliveroo are anticipating that its stance will lead to costly and time-consuming litigation down the line,” Bada said.
“That investors are becoming more interested in how companies treat their staff is also indicative of the trend towards ethical investment. Allegations of worker exploitation or findings of poor employment practices may not only harm a business’s reputation but also make it unattractive to investors.”
The company’s IPO is set to go live on April 7th. Until then uncertainty and debate will continue to plague Deliveroo.
