Deliveroo Jumps After Court Rules its Drivers are Self-Employed

Deliveroo Plc got a much needed boost after a U.K. appeals court ruled its riders are self-employed, bolstering the viability of its labor model after rival Uber Technologies Inc. lost a similar case earlier this year.

Deliveroo’s shares in London jumped after the ruling. The company’s reliance on gig workers drew criticism from investors and riders in the run-up to its disappointing March initial public offering. The company said Thursday’s unanimous court decision dismissing an appeal from the IWGB labor union affirmed its aim to offer couriers full flexibility.

“U.K. courts have now tested and upheld the self-employed status of Deliveroo riders four times,” the company said in an emailed statement.

The decision comes months after the U.K.’s Supreme Court ruled that Uber’s drivers must be treated as “workers,” a legal status that gives people rights such as a guaranteed minimum wage and paid vacation time. That ruling was largely based on the control Uber exerted over its drivers, including their ability to log them out of the app.

Shares in Deliveroo increased as much as 6.3% by 1 p.m. in London on Thursday. The biggest jump since April 12.

The appeals court considered the Uber ruling but decided that it wasn’t relevant to this case. The Deliveroo suit is concerned with riders’ ability to unionize, while Uber’s case was focused on the worker rights drivers were entitled to under U.K. employment law.

Judge Peter Coulson said that the ruling may seem counterintuitive because “it may be thought that those in the gig economy have a particular need of the right to organize as a trade union.”

“I quite accept that there may be other cases where, on different facts and with a broader range of available arguments, a different result may eventuate,” he said, leaving the door open to other potential claims involving gig economy workers.

“The Court of Appeal has emphatically upheld the findings of the High Court, even after considering the effect of the recent Supreme Court decision” in Uber that found that Uber drivers were workers, Colin Leckey, a lawyer at Lewis Silkin who represented Deliveroo in the case, said.

Still, the problem of how gig workers can collectively bargain isn’t going away, according to Joe Aiston, an employment lawyer at Taylor Wessing who wasn’t involved in the case.

“At a time when wildcat strikes and negative publicity via social media have the ability to strike at an employer’s commercial interests, the power is arguably to be found in the way businesses treat staff and manage their reputation,” Aiston said.

The IWGB said it would continue to evaluate its legal position and work for collective representation at Deliveroo.

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