Deliveroo, Amazon Flex, and other gig-economy-based delivery platforms are set to be dramatically impacted in the UK following a landmark Supreme Court ruling.
Courier companies that have become the backbone of retail delivery during lockdown could soon have their business models, which rely on riders being classed as independent contractors, turned on their heads.
Last week the UK’s highest legal authority ruled that a group of Uber drivers must be classed as employees by the company, not independent contractors.
This landmark ruling, which wrapped up a five-year employment tribunal, is expected to have “huge implications” for companies like Deliveroo, Amazon Flex, Door Dash, Just Eat Takeaway and FoodPanda.
Uber, which has seen its Uber Eats takeaway and grocery delivery arm grow significantly during lockdown, could see costs exceeding an estimated £100 million incurred if the ruling becomes a legal precedent.
“Besides a potential cost to Uber which it is estimated could easily top £100million, this decision will have huge implications for the rights of what we estimate to be more than five million UK gig economy workers,” partner with Constantine Law Alan Lewis said.
“It adds to the weight of judicial authority, building on cases such as Autoclenz and Pimlico Plumbers, that has emphasised the need to rely less on the written contractual terms and more on what happens in reality.”
Hargreaves Lansdown’s senior investment and markets analyst Susannah Streeter added: “The action taken against Uber wasn’t the first and won’t be the last by drivers and couriers paid by the ride or delivery, yet penalised if they don’t adhere to strict company rules governing how they operate.
“The argument that these platforms are simply booking agents, linking companies and customers, no longer washes if contracts signed by drivers limit their ability to work elsewhere due to detailed clauses on availability.”