Sunday 14 August 2016 2:55 pm

Deliveroo drives into pay row with warning on minimum wage

Deliveroo has ridden into trouble with changes to the way it pays delivery drivers, prompting a warning from the government over adhering to rules on the minimum wage.

Drivers last week took to the London streets to protest the changes, which they argue leaves them being paid less than the £7.20 National Living Wage (NLW), and which the Labour Party branded "a return to Victorian Britain".

Deliveroo has said it is only testing out the new wage system and that "nothing is set in stone at this stage" emphasising that it increased flexibility for drivers.

Read more: Deliveroo defends new "flexible" pay conditions as protesters descend on HQ

It pays the self-employed drivers, who deliver takeaways from places such as Pizza Express and Wagamama, £7 per hour and £1 for each delivery. Under the new structure, they would be paid £3.75 per delivery instead. Deliveroo said tests in an initial trial run in Chiswick had doubled some average hourly fees over busy periods.

The startup, backed with millions of dollars in venture capital funding, has now said that drivers can pull-out of the trial if they wish and it will guarantee a minimum hourly rate at peak times for drivers who do continue to participate.

"We're committed to having an open conversation with riders about this trial. We’ve reached out to every rider involved to gather feedback," said UK managing director Dan Warne.

"We’ve listened to their concerns and offered every rider the choice to withdraw from the trial. For those that choose to take part in the trial we’ll also be guaranteeing fees at peak times for riders will be at least £7.50 per hour plus tips and petrol costs.”

Around 280 of 3,000 riders in London had signed up to be part of the wider test which is due to start this week across five areas across the capital.

Read more: Deliveroo just raised $275m to fend off Uber

But the pay row has prompted a reminder that the nature of the work defines whether a worker is deemed self-employed or a worker.

“The government is determined to build an economy that works for all – that includes ensuring everyone gets a decent wage. An individual’s employment status is determined by the reality of the working relationship and not the type of contract they have signed,"  spokesperson for the department for business energy and industrial strategy said.

“Individuals cannot opt out of the rights they are owed, nor can an employer decide not to afford individuals those rights. Employers cannot simply opt out of the NLW by defining their staff as self-employed.”