Deliveroo’s £16m gift to loyal riders ‘is no compensation for bad pay’

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Deliveroo is lining up a £16m “thank you fund” for a quarter of its riders with those delivering the most orders set to receive up to £10,000.

The fund is set to launch alongside a planned $7bn (£5bn) stock market flotation in London under which the takeaway courier firm is also putting aside £50m of shares for customers to back the business they get their dinner from.

The rider fund will only make payments to those who have worked with Deliveroo for at least a year and completed 2,000 orders. It will cover all 12 of the countries where the firm operates. Payments will be on a sliding scale from a minimum of £200 to a maximum of £10,000, depending on the number of orders that riders have delivered. The average payout per eligible rider is expected to be £440.

More than half of those in line to receive the £10,000 sum are in the UK, some of whom began riding with Deliveroo alongside founder and chief executive Will Shu soon after the company was launched in 2013.

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Shu said: “I want to thank our riders who have been working with us for years, delivering great food and such a fantastic experience for our customers. They have been central to our growth and will continue to be.”

The payout is likely to prove controversial as Deliveroo has faced heavy criticism over its couriers’ pay. It argues they are self-employed, independent contractors not entitled to the national minimum wage, holiday pay or pension contributions.

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Riders have complained that a multimillion-pound Rider Support Fund, which promised financial support for those forced to self-isolate during the pandemic, was difficult to access.

Deliveroo says it is offering riders a cash payout because it legally cannot give them shares in the stock market launch as they are not employees.

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From 8 March, any Deliveroo customer who has placed an order will also be able to register their interest in applying for shares in the planned flotation using the company’s app under an offer dubbed “great food with a side of shares”.

If the float goes ahead, customers will be able to apply for shares via the

PrimaryBid website. Each customer will be able to apply for up to £1,000 of shares.

View image in fullscreenFormer banker William Shu founded Deliveroo from his London flat in 2013. Photograph: Nora Tam/Getty Images

The flotation is likely to mean a multimillion pound payday for Shu, a former investment banker who launched Deliveroo from his London flat in 2013. Today the company works with 140,000 restaurants and 110,000 riders in more than 800 towns and cities around the world. Shu said recently that Covid-19 had accelerated consumer adoption of food-delivery services by about two to three years, with order volumes in the UK and Ireland now running at double 2019 levels.

Alex Marshall, president of the IWGB union, which represents gig economy workers, said the handouts to riders did not make up for poor pay and conditions. “This is just another PR stunt by Deliveroo to try and divert attention from a workforce that has been exploited since the company’s inception,” he said.

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“This does not come close to compensating riders for a lifetime of precarity and poverty pay. They should call it their apology fund. If they wanted to thank these key workers, how about they guarantee minimum wage, a fair terminations process and basic workers’ rights?”

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Russ Mould, a director at investment firm AJ Bell, said the restrictions on the shares on offer to customers meant there could be a “bun fight” among small investors as Deliveroo had made it clear that it would give priority to more regular customers if the offer looked popular.

Most recent stock exchange floats have been restricted to professional investors and Mould said: “It’s great to see Deliveroo extend its IPO to retail investors and not follow the typical route of restricting the shares to institutional investors like pension funds.”