It's a major legal victory for the food delivery firm.
Food delivery startup Deliveroo has won an important legal victory after a UK tribunal ruled that its delivery riders are self-employed, not workers entitled to rights such as minimum wage.
The Central Arbitration Committee in London dismissed a claim on Tuesday from the Independent Workers of Great Britain (IWGB) union that its riders were workers.
The case is a slightly convoluted one: The IWGB is a newly formed organisation that represents workers from the precarious gig economy, including some Deliveroo drivers. It went to the CAC in March to gain recognition as a union.
The IWGB wanted to establish a collective bargaining unit covering riders in Camden and Kentish Town, which involved determining whether they were workers or self-employed. Had the IWGB won this case, it wouldn't have automatically meant workers' rights for Deliveroo riders, who would still have needed to file a separate claim.
The CAC's decision rested on the issue of substitution, where Deliveroo riders are allowed to drop out of jobs provided they find a replacement rider. That meant they can't be classified as workers.
The CAC said in its judgement: "The central and insuperable difficulty for the Union is that we find that the substitution right to be genuine, in the sense that Deliveroo have decided in [its new contract] that Riders have a right to substitute themselves both before and after they have accepted a particular job; and we have also heard evidence, that we accepted, of it being operated in practice.
"Since we have found that the riders are not workers, we cannot accept the Union’s claim for recognition and for rights to negotiate on pay, hours and holidays with Deliveroo."
It's a major win for Deliveroo and the so-called gig economy, given Uber lost a similar battle only last week. The ride-sharing firm lost its appeal that its drivers are workers, rather than self-employed, though it plans to escalate its claim to a higher court.
The victory comes after the government commissioned RSA chief executive Matthew Taylor to scrutinise the working practices of Deliveroo and other gig economy firms.
Dan Warne, managing director of Deliveroo, said:
"This is a victory for all riders who have continuously told us that flexibility is what they value most about working with Deliveroo. We welcome the decision of the Committee. As we have consistently argued, our riders value the flexibility that self-employment provides. Riders enjoy being their own boss - having the freedom to choose when and where they work, and riding with other delivery companies at the same time.
"As set out in our submission to the Government’s Taylor Review, we want employment law to be changed so we can provide more security to our riders - such as offering injury pay and sick pay - whilst maintaining the flexibility they value.
"We want to work with Government to update legislation and end the trade off between flexibility and security."
The CAC did acknowledge that riders had largely supported the IWGB, adding: "There are clearly concerns about the precarious nature of the work and the wider debate around the gig economy."
The IWGB's general secretary, Jason Moyer-Lee, said Deliveroo had found a way to "game the system", and accused the firm of adding the subsitution clause to rider contracts at the last minute.
He said: "Despite the CAC's finding that a majority of the riders in the bargaining unit would likely support union recognition for the IWGB, it seems that after a series of defeats, finally a so-called gig economy company has found a way to game the system."
"On the basis of a new contract introduced by Deliveroo's army of lawyers just weeks before the tribunal hearing, the CAC decided that because a rider can have a mate do a delivery for them, Deliveroo's low paid workers are not entitled to basic protections."