Takeaway company Deliveroo has cancelled a trial change to its payment model which would have seen drivers in London go from a fixed hourly rate to being paid per delivery. While only a pilot scheme, Deliveroo was still asking all of its drivers to sign a new contract, prompting a planned courir protest which eventually saw the company backtrack.
It’s not an uncommon occurrence in the gig economy. Start-ups focus on scaling fast and maintaining the instantaneous service that consumers have come to expect, but that can sometimes cause strain on workforces who aren’t protected by traditional employment structures. In the UK, the government has stepped in to call Deliveroo and other on-demand service providers to account.
“An individual’s employment status is determined by the reality of the working relationship and not the type of contract they have signed,” reads the official statement from the Department for Business. “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 (national living wage) by defining their staff as self-employed.”
In the United States, Senator Elizabeth Warren has also taken the gig economy to task. In her speech at the New America Foundation conference, she went in on Uber and Lyft, saying that their business models inherently rely on low wages for drivers.
“The gig economy didn’t invent any of these problems,” she says. “In fact, the gig economy has become a stopgap for some workers who can’t make ends meet in a weak labour market. The much-touted virtues of flexibility, independence and creativity offered by gig work might be true for some workers under some conditions, but for many, the gig economy is simply the next step in a losing effort to build some economic security in a world where all the benefits are floating to the top 10 per cent.”
So if companies operating within the gig economy have a duty of care to their workers as well as to their customers, do these business models need to be redesigned? Much like the UK government, Warren believes that all companies should be required to offer certain securities to their employees, from insurance to paid leave. She also recommends that labour laws be clarified to include newer work and employment structures.
Meal-sharing start-up Josephine is a company founded after the gig economy’s first wave, and as such, has incorporated criticisms of Deliveroo and Uber into its mission statement. The business centres on delivering meals that have been cooked by people in their homes, as opposed to a restaurant kitchen, based on the belief that “home cooking feeds more than just our appetites” and “food brings people together.”
In order to avoid familiar pitfalls within the gig economy, Josephine encourages cooks to take ownership and agency — come January, 20 per cent of the company will be offered to workers in stock options. The stocks will be distributed based on performance. Josephine has also founded a ‘Cook Council,’ a feedback mechanism designed to foster cooperation between cooks and leadership.
“We’ve been thinking a long time about how tech platforms can be less extractive and provide more value to the communities,” Charley Wang, CEO, told TechCrunch. “We did a lot of research into co-operatism and the B-corps. We finally felt like we were at a good place where we could make meaningful stakes in trying to be an ethical employer and non-extractive platform.”
Josephine has raised $2.5 million in funding so far, which just goes to show that empowering your workforce can be as integral to business as serving your