One of the UK’s largest investors says they will not invest in Deliveroo due to concerns over workers’ rights.
The export company expects to have a value of up to £ 8.8bn when it lists its shares in April.
But Aviva Investors, which owns £ 365bn in assets, said it would not invest as Deliveroo passengers did not receive a minimum wage, sick leave and holiday pay.
Corporate Social Responsibility
Deliveroo said its self-employed passengers were “free” to choose their own hours.
David Cumming, chief investment officer at Aviva, told the BBC’s Today Program investors that they are taking social responsibilities “seriously.”
“Most employers can make a big difference in the lives of employees if they guarantee working hours or a living wage, and how companies behave is very important.”
He pointed out that Deliveroo workers “are currently considered riders [meaning they] do not receive basic rights for minimum assured wages, sick leave or holidays”.
“We will not invest in Deliveroo for many reasons but that is one of them,” he said.
Investment Risk
Mr Cumming also warned of the risk that drivers will have to be reclassified as workers, which would entitle them to rights such as sick and holiday pay.
“It’s a risk to invest if the law changes,” said Mr Cumming.
Uber recently decided to reinstate its drivers as employees after a prominent UK High Court case last month.
Since losing a five-year legal battle with drivers who claim to have unfairly divided their employment status, Uber has provided holiday pay, a guaranteed minimum wage, and pension benefits to its drivers.
Some gig economy companies have been paying close attention to the Supreme Court decision in February despite not working for Uber Eats – the arm of business food delivery.
Deliveroo has set aside more than £ 112m to cover potential legal costs related to the employment status of its delivery riders.
It warned potential investors of the risk of litigation around the world in documents setting out its plans for a stock market debut published on Monday.
“The European Commission is set to draw up new legislation governing how the gig economy model works across the bloc,” pointed out Susannah Streeter, an analyst at Hargreaves Lansdown.
“If Deliveroo is forced to change the way it classifies its riders in the future, it is likely to puncture its profits prospects, and could even derail the delivery giant.”
Mr Cumming said there was a “combination of investment risk and social issues that affect our judgment whether the shares are a buy or not”.
Deliveroo, which was founded in 2013, said it will hand its riders bonuses of between £200 and £10,000 when it floats, depending on the number of orders they have delivered.
