On-demand restaurant food delivery startup Deliveroo is facing more protests in London this week over a new pay structure it’s trialling in the U.K. capital that seeks to switch drivers to a fixed fee of £3.75 per delivery, rather than the £7 per hour plus £1 per delivery they earn under the old pay structure.
A group of angry Deliveroo drivers are now crowdfunding a “strike fund”, via the Crowdpac platform, to help those protesting the new pay structure, given that — as ‘independent contractors’ working on a tech platform — they are foregoing the ability to earn during time spent protesting.
Financial means aside, the fear of being easily replaced is another reason why it is difficult for gig economy non-unionized, autonomous freelancers to organize and engage in collective bargaining with their platform-controlling employers.
For that reason, the IWGB says today’s protest will target a company recruitment office in North London — to try to ensure the protest reaches the ears of potential new Deliveroo recruits.
The protestors have apparently been offloading some of the associated organization and negotiation logistics onto the Independent Workers Union (IWGB) Couriers & Logistics Branch, which claims to have acted as their representatives in talks with Deliveroo.
Protesters have called for Deliveroo customers to cook their own dinner, instead of paying for a meal delivery, and donate to the fund instead.
At the time of writing the crowdfunder has pulled in close to £8,000 from some 600 donors to help finance the action.
Last week the protestors held a series of demonstrations against the new pay structure, arguing that it can result in payment as low as £0 to £3.75 per hour during slower periods (i.e if they’re only able to make up to one delivery per hour).
They argue the company should pay workers for time spent waiting to pick up deliveries not just for fulfilling a delivery. They also claim the new structure encourages drivers to take risks in order to speed up deliveries to make enough money to make ends meet.
(As is the rule with gig economy platform operators, Deliveroo workers — the company refers to them as “riders” — are also not offered employment benefits such as sick pay or holiday pay.)
The Deliveroo protestors are calling for the company to pay the London Living Wage of £9.40/hour plus costs (e.g. fuel for the moped they use to make deliveries) plus any tips and plus £1 per delivery.
Responding to that specific demand in an interview with TechCrunch, Deliveroo’s UK MD Dan Warne said: “Deliveroo riders receive more than that, on average, an hour and on the new model we believe they will continue to receive more than that.”
“We frame this new structure believing that drivers will make significantly more on average per hour, than the minimum wage,” he added.
In a note on its blog about the new payment model, the company says the pricing structure is aimed at increasing flexibility for riders. “We designed this trial to enable riders to work whenever they want by logging on-and-off as desired,” it writes in a blog post — which is closed to comments, despite also including the claim that “we’re committed to an open conversation, so we can continue to improve our payment model and delivery experience”…
“In the places we’ve piloted it, we’ve seen average hourly fees for riders increase by up to x2 the previous payment model at our busiest times,” Deliveroo added. “Many drivers tell us they will receive more fees over a shorter period of time with this model, and that this works better for them.”
Warne claimed that around 80 per cent of Deliveroo’s UK riders have other jobs — hence the ‘bottom up’ demand for more flexibility.
“By moving to this new model it allows individuals to work exactly when they want,” he said. “We have a Brazilian driver… he’s a DJ for most of his time and then the evenings he works for Deliveroo. On the old model he’s been somewhat restricted with the nights of the week that he can work — because he has to work a given shift, at a given time on given days of the week.
“Moving to this new model he’ll be able to plug in and work when he likes. If he wants to plug in and work for half an hour at nine PM he can do that.”
Although it was not initially doing so, Deliveroo is now providing some payment guarantees under the trial model — Warne notes it made this change after taking feedback from riders on the new model — such as offering the certainty of being paid for between two and three deliveries during busy periods. (Although at other times of the day payment depends entirely on deliveries fulfilled.)
In a statement provided to TechCrunch the company added:
Everyone’s familiar with the pounds per hour payment model, and that works very well for many people. But for some, they can make more money by getting paid for the amount of work they do — because they’re really fast workers. We’ve found that this would work for some of our riders, so last week we decided to offer a new payment option, and trial it with some riders and get their feedback.
And that’s where we are now: rides in the trial areas can still opt for our standard £7 per hour + £1 per delivery model, but now they can also choose to go for a £3.75 per delivery model – which will clearly work better for those who deliver 3 or more deliveries per hour (in both cases they can keep tips and we pay fuel costs). We can also advise any rider if we think they could benefit from making the switch. They can then try it out, and go with that if it works, or go back to the pounds-per-hour approach if it doesn’t, or their circumstances change. It’s all about giving them flexibility, which is what they tell us is most important to them.
The UK government chipped into the debate on Sunday, with a spokesperson for the Department for Business, Energy and Industrial Strategy noting that Deliveroo must pay drivers the National Minimum Wage, of £7.20 per hour (via The Guardian) — unless a court or HM Revenue and Customs defines workers on the platform as ‘self-employed’. Employment tribunals can also be involved in determining a worker’s employment status — sometimes overturning an earlier HMRC classification. So determining employment status can be a complicated process.
Warne confirmed Deliveroo defines its riders as ‘independent contractors’, and said that is based on “a level of flexibility that’s given to the workforce”.
“In our case we offer significant flexibility with the traditional model and even more flexibility moving to the new model,” he said, adding: “The reason we’ve made these changes is because our drivers have been asking for them.”
He took pains to emphasize that the new pricing model is merely being trialled at this point, with the trial period set to run for 90 days — after which he said Deliveroo will assess how it went and make a decision on next steps. Nothing has been decided as yet, he added.
Some 280 of Deliveroo’s riders are currently affected by the trial — a sub-set of the 3,000 contractors it has working in the capital. While the five affected delivery zones are in North and North East London — including affluent areas such as West Hampstead and Belsize Park.
Warne said there are no plans to expand the trial to other London zones at this point.
Deliveroo riders in the affected zones can opt out of the new pricing model if they prefer to continue with the old pricing structure — although Warne confirmed the opt out was implemented after the company spoke to “around 250 riders over the past week”, to garner feedback.
“We decided to give them the choice,” he noted.
However those exercising this choice cannot continue working in the same area, and must move to a new zone — which a spokeswoman for the IWGB pointed out means learning a whole new territory; a process which she argued inevitably means taking a pay-cut because of the necessary learning curve.
Warne rebutted those criticisms, pointing to the small sizes of delivery zones (London Deliveroo riders will only travel a maximum of 2.2km per delivery), and arguing that navigation and mapping technology means there’s very little learning curve required nowadays.
“Zones in London are very, very small. So we’re talking about moving from somewhere like Camden to an area adjacent to that area. We’re not asking them to move to another town or another city or even to the south when they’re up in the north. It’s a very straightfoward move for them in order to stay on the existing model,” he said.
“The knowledge increasingly becomes less relevant with the technology we give them to navigate around the area… They will have an app on their phone which will navigate to the restaurant, and then from the restaurant out to the customer, giving them every opportunity to maintain the same speed, and the same number of deliveries that they do in their existing area.”
“We cannot run simultaneous trials within the same zone. The nature of the flexibility on a per drop model does require that one functional zone in London has that model in its entirety,” he added.
Other criticisms of the new payment model are that it incentivizes haste — ramping up safety risks for riders, i.e. given they will be focused on making more deliveries in order to earn more money.
On this point Warne claimed safety is “a number one priority” for Deliveroo, noting the company is working with road safety charities, and runs trials for new drivers who sign up to make deliveries via the platform.
“The opportunity for them to earn more money is going to come from Deliveroo’s ability to develop stronger algorithms and better technology so that they can do more in shorter periods of time. There’s a massive, enormous opportunity for us to do that,” he said. “The way the mapping works, for example, is to give them the safest route — not the quickest route. I’ve got to prioritize that above anything else i the business. Drivers are so important to us.
“The zone size and the delivery distances are never more than 2.2km for these drivers, so it ensures short routes where the majority of the time of the order is actually made up around things like the wait time in a restaurant. Or the acceptance time on the order coming through to the driver’s app. Because of those short distances it really doesn’t make a huge amount of difference if a driver can rush or not the bit between going from the restaurant to the customer.”
Of course there’s no guarantee Deliveroo won’t kill its old pay structure entirely in future — should it determine in its review of the trial that it’s better to do so. Without employment rights, gig economy workers that provide services on such tech platforms face ongoing precariousness with limited means to organize and protest changes.
Warne strongly denied IWGB allegations that some protesting riders had been dismissed by the company as entirely false, however.
He also denied an IWGB report of the company offering payment to riders to stop protesting or provide information on other riders who are participating in protests.
But he did concede the company regrets how it has communicated the payment trial to riders.
“We’re all really upset about how this has gone down and we’re beating ourselves up around the fact that we haven’t communicated well enough to drivers. That’s very, very clear to me,” he told TechCrunch.
This is a new model where the safety net, the safety blanket of getting hourly pay is removed and thus you’ve got to really clearly communicate.
“This is a new model where the safety net, the safety blanket of getting hourly pay is removed and thus you’ve got to really clearly communicate — through the data that we have on what the drivers do, and how many orders they can do in an hour at peak, which is sometimes even six or seven orders — we haven’t made that clear enough to them, which is why I think I a lot of them got upset.”
“I’m very happy to admit and frankly very happy to apologize for what I think has been poorly communicated on our part,” he added.
On the future of the £7 plus £1 model, Warne said: “It would only be discontinued if we were comfortable that drivers felt unanimously confident that this was right for them.”
Asked why Deliveroo’s rider contracts, seen by TechCrunch, include requirements to wear branded clothing during Deliveroo shifts — a measure which sounds akin to enforcing a uniform — Warne said this is a safety consideration because the clothing is “reflective”.
Earlier this month the startup, which was founded in 2013, closed a $275 million Series E round of funding — a new financing round which we reported as valuing Deliveroo at close to $1 billion.
TechCrunch’s Steve O’Hear contributed to this report