Deliveroo has been criticised over a “publicity stunt” union deal, with investors unsure of what the move means for riders’ rights.
The union announced on Thursday it was forging a “first of its kind” union recognition deal with GMB union, which has not traditionally been associated with the gig economy.
The Independent Workers Union of Great Britain (IWGB) slammed the food delivery firm as “desperately trying to come with some kind of positive PR,” after facing bad press over the treatment of a 90,000-strong UK workforce.
It appeared as though Deliveroo investors would take the news with a “pinch of salt,” with the share price “not picking up” after the announcement, AJ Bell financial analyst Danni Hewson told CityA.M.
Shares were lifted some two per cent when trading closed on Thursday evening.
“Investors were incredibly concerned by [Deliveroo’s] workforce model, at the beginning. If Deliveroo were to not do anything about that, shares were only going to go one way,” she added.
“There seems to be an awful lot of wriggle room in this deal,” she added. “It is fascinating that both Uber and Deliveroo have gone to GMB to strike a deal, rather than the gig workers’ union – which would be a far more difficult and prickly conversation.”
The IWGB has claimed the London-listed firm has struck the deal to “undermine” its own efforts in appealing a court ruling that deemed Deliveroo riders as self employed couriers, rather than employees.
The union has asked for permission to appeal to the Supreme Court in a case fighting for statutory collective bargaining rights, which could see a recognition of riders as employees.
“It’s no surprise that they have pulled a move like this because they have had this huge court case hanging over them for years now,” IWGB president Alex Marshall told CityA.M.
In a statement, the union said Deliveroo had made a “backroom deal” with the GMB, which “presents no threat to their exploitative business practices.”
When asked about the IWGB’s statement, GMB’s lead national officer Mick Rix said that “what other organisations are saying is not my concern.”
The GMB trade union was formed 130 years ago and the agreement with Deliveroo was a continuation of that work, he added.
GMB was in “closely knit” talks with a couple of companies within the food delivery, Rix told CityA.M.
“We’ve consistently said the gig and platform economy does not have to be the Wild West for workers’ rights,” he added.
Deliveroo may fall victim to “wishful thinking” in hoping to ride away from difficult questions about the gig economy model, according to Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Under the agreement announced on Thursday, Deliveroo promises contractors guaranteed minimum earnings and to negotiate with GMB annually on a range of issues including security and wellbeing. However, collective bargaining will be voluntary.
“The compromise deal with the GMB may placate some concerns but challenges to working practices at the companies are likely to continue, particularly as the cost-of-living crisis mounts and couriers see earnings eroded by inflation,” Streeter said.
Analysts pointed out that Deliveroo’s shares were down almost 60 per cent on the year to date, with the firm among other technology companies to struggle after a London listing.
When asked to respond to the IWGB’s comments, Deliveroo did not wish to comment.