employment rights setback could cost the firm a total of more than $500 million.ĭeliveroo has allocated more than £112 million to cover the potential legal costs relating to the employment status of its riders and warned potential investors of the risk of litigation worldwide. Bank of America estimates that Uber's U.K. Uber was forced to do this last week after a Supreme Court ruling in Britain. They're also not entitled to the national minimum wage.Ĭumming noted that there's an element of risk associated with Deliveroo's IPO in case the legislation changes and Deliveroo has to reclassify its riders as workers. They added that there's strong investor interest in the upcoming IPO.ĭeliveroo's riders are technically self-employed, so they're not eligible for vacation days and sick pay. as informal employment contracts potentially fall short in offering the value, job security and benefits of full employment."ĭeliveroo's narrow profit margins could be at risk if it is required to change its rider benefits, Krefting added.Ī spokesperson for Deliveroo told CNBC that riders have the "freedom" to choose when they work and that they can work for multiple apps at the same time, including rival platforms like Uber Eats. This is largely driven by the company's reliance on gig-economy workers in the U.K. Rupert Krefting, head of corporate finance and stewardship at M&G, said: "We still see risks to the sustainability of its business model for long term investors. M&G Investments is also planning to skip on the IPO. "We won't be investing in Deliveroo for a number of reasons but that is one of them." "A lot of employers could make a massive difference to workers' lives if they guaranteed working hours or a living wage, and how companies behave is becoming more important," said Cumming, before pointing out that Deliveroo riders don't get basic rights. equities at Aberdeen Standard, told the BBC's "Today" program on Thursday that Deliveroo's worker conditions are a "red flag," adding that Aberdeen Standard's decision is similar to its recent move to sell off shares in clothing retailer Boohoo, which has been accused of worker exploitation.Īviva declined to comment but it referred CNBC to comments made by David Cumming, Aviva's equities chief investment officer, to the BBC Thursday. We will not be taking part in the Deliveroo IPO as we are concerned about the sustainability of the business model, including but not limited to its employment practices, and also the broader governance of the business."Īndrew Millington, head of U.K. "Our clients' expectations of how we incorporate ESG (environmental, social and corporate governance) into our decision making have changed hugely over the last decade and so we feel our clients are supportive of our approach. "As long-term investors, we're looking to invest in businesses that aren't just profitable, but are sustainable – employee rights and employee engagement are an important part of that," an Aberdeen Standard spokesperson told CNBC. Two of the U.K.'s largest asset managers also said this week that they won't buy Deliveroo shares.Īberdeen Standard and Aviva, which manage over £800 billion between them, said they're concerned about how Deliveroo treats its riders. "We take our role as a responsible steward of our clients' capital very seriously and engage with a number of companies in this sector on ESG concerns, like the rights of employees and proposed share class structures." "We see increasing signs of countries and governments reviewing the gig economy status," they added. "We are unlikely to participate in the IPO via our active or index funds," a spokesperson for Legal and General told CNBC on Friday. It cited concerns around the gig economy that Deliveroo operates in and the company's share ownership structure, which gives CEO Will Shu over 50% of the voting rights. However, the U.K.'s largest fund manager, Legal and General Investment Management, which manages over £1.3 trillion in assets, said it probably won't be involved. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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