Consumers have a big appetite for online food-delivery services, which have placed a vast number of restaurants and food retailers at their fingertips. Texas-based research-and-consulting firm Frost & Sullivan predicts global revenues in this sector will reach US$200 billion by 2025. However, as demand for these services grows, so too does the call for app based companies to deliver basic rights for their workers.
The issue is that platforms such as Foodora, DoorDash and Uber Technologies’ UberEats classify their workers as “independent contractors,” not employees. Therefore, they’re not covered by laws that protect employees and provide standards such as minimum wage, paid holidays, health benefits and the right to join a union.
“If you talk to some of the couriers themselves, they’ll say there’s no question these app-based employers can afford to pay more and they can certainly afford to provide basic leave entitlement and health-and-safety provisions. It just means they won’t make as much profit,” says Larry Savage, professor of Labour Studies at Brock University in St. Catharines, Ont. “And so, that’s one of the eternal questions in business: how much money does the company need to make in order to be competitive?”
Around the globe, app-based workers are protesting precarious work and joining the union drive. Over the past couple of years, couriers at Deliveroo, UberEats, DoorDash and Foodora have staged protests over inadequate pay and unsafe working conditions in countries including Canada, Australia, the U.K., Germany, Belgium and Mexico.
This past August, Foodora couriers in Toronto voted on union certification, seeking better health-and-safety protections and a better compensation model. (Foodora’s workers are paid $4.50 per order, plus $1 per kilometre between the restaurant and the delivery address and the order.) The results remain sealed until Ontario’s Labour Board decides whether they (as independent contractors) had the right to cast ballots in the first place.
In Japan, Uber Eats workers formed a labour union in October after a month’ slong campaign. According to Japan Times, the union plans to request the company ensures fair treatment for delivery riders and reviews how distance-based wages are set.
This followed on the heels of the firstever collective-bargaining agreement between a food-delivery platform and a trade union, when Foodora in Norway agreed to a collective-bargaining agreement after a five-week strike by workers.
In addition to the union drive, there’s a push to pass laws protecting workers in the so-called gig economy. California recently passed a bill, known as AB5, which makes it harder for food-delivery and ride-sharing companies to classify workers as contractors instead of employees. As employees, the workers are entitled to minimum wage, workers’ compensation and other benefits. New York is said to be the next battleground for legislation and, in October, the Senate Standing Committee on Internet and Technology held a public hearing to hear from stakeholders.
“How that will play out elsewhere remains to be seen, but we’ve got a gap between this advance in technology and the [law],” says Paul Willetts, partner and employment and labour lawyer at Vey Willetts in Ottawa. “The law is trying to play catch-up and figure out what to do and, ultimately, get to a situation of fairness — both for the individuals and the businesses that are looking to operate.”
Whether mandated by law or collective agreement, the increased costs of employee wages and protections will likely be passed on to consumers — and they may not bite.
“You’ll have risks of increased costs for food delivery, therefore, customers won’t be ordering as often because it will cost too much,” says Howard Levitt, senior partner at Levitt LLP Employment and Labour Lawyers in Toronto. “And, therefore, [restaurant operators] are going to have to find their own means of delivery or just abandon much of that business they’re getting used to.”
Willetts says if the cost of doing business does rise, app-based businesses have a few options.
“One is you modify your business model to incorporate [the costs] without harming your bottom line. Potentially, you discontinue operations, which would be an extreme example. Or, you look to pass the cost on to the consumer.”
Written by Rebecca Harris