Two former Deliveroo managers will pay a fine of $32,380 after it lost a court challenge in France over the freelancer status of riders.
The British food delivery giant will also need to comply with the maximum penalty of $406,247. In addition, the Paris court ordered the company to publish the ruling on the platform for one month.
Accordingly, this issue may resound outside France as the gig economy faces several court challenges. It may also open changes in the business structure to redefine working conditions.
The company operates through digital apps and self-employed workers. However, under French law, employee status grants rights like unemployment benefits, social security, and pension contributions.
The administrative investigation revealed that Deliveroo had imposed almost permanent surveillance and control over riders’ work. This inspection reviewed a period extending from 2015 to 2017.
Subsequently, it even allocated riders to long time slots to ensure that the platform had enough workforce during the weekend. The firm also warned that drivers who refused would not have work in the following weeks.
At the same time, the court also found that Deliveroo changed the criteria that define pay increases. It also adjusted the minimum time needed to qualify as a rider online.
Experts explained that this set of elements characterizes a situation of almost permanent legal subordination.
Deliveroo stated that it would categorically contest the French court’s ruling. The business emphasizes that it strongly disagrees with this judgment.
Moreover, it said the court decision referred to an early version of its operating model. In line with this, it mentioned no consequences for how it operates today.
Correspondingly, the delivery platform said it would maintain operations in the country. On Wednesday, its shares slumped 0.46% or 0.65 points to $140.18 per share, following the court announcement.
Deliveroo faces employment status challenges
In recent years, Deliveroo has fended off many challenges to riders’ employment status.
However, it also previously lost a challenge in France in early 2020. Regardless, the company appealed, resulting in the reversal of the ruling.
In Spain, Deliveroo previously operated alongside competitors, including local giant Glovo. Eventually, the firm opted to exit the market in November last year after a reform of local labor laws.
The new Spanish legislation targeted delivery platforms to address the problem of bogus self-employment. These rules require platforms to classify delivery workers as employees by default.
Similarly, the European Union lawmakers are currently drafting legislation to set a minimum standard for platform workers. This effort would focus on pay, conditions, and social protections.