Deliveroo says riders can opt out of new pay plan in latest tech clash

LONDON, Aug 15 (Reuters) - Food delivery firm Deliveroo said riders could opt out of its new payment system in Britain after becoming the latest high-flying tech start-up to come in for criticism for the employment terms given to its staff.

The London-based company, valued at more than $1 billion after a recent funding round, said a proposed plan to pay riders per delivery and not per hour had been a trial that its staff could opt out of if they wanted to.

The new system of payment per delivery had prompted staff protests, criticism from the government and condemnation from the opposition Labour party which accused Deliveroo of offering a return to a piecemeal “Victorian system” by cutting costs and increasing insecurity for staff.

“Our riders are the lifeblood of our company,” founder and chief executive William Shu told BBC radio on Monday.

“This is a choice for them. If the riders choose to be on the new scheme, great. If riders feel like it’s not for them they can always choose to work on the old scheme as well.”

The dispute echoes similar standoffs in the United States and elsewhere between staff and fast-growing tech platforms such as Uber which provide an instant service to customers through workers who are self employed.

With their distinctive black and teal jackets, Deliveroo riders have become a familiar sight on London streets since the firm started trading in 2013, delivering food from restaurants which do not have their own delivery service.

The firm, which competes with the likes of Just East and UberEats, says it has around 6,000 riders in Britain, with 3,000 in London, using either mopeds or, more commonly, bikes.

Active in 12 countries across Europe, Asia and the Middle East, Deliveroo tested a system in five areas in London last week where riders received 3.75 pounds per delivery rather than the current 7 pounds per hour plus one pound per delivery.

Deliveroo said in the trial of the new system, the average hourly fees for riders had doubled at the busiest times. “We are open to all feedback and, contrary to speculation, have not taken any action against riders who have expressed concern with pay or the payment model,” it said in a blog.

Deliveroo’s new pay scheme has made headlines in Britain where there is mounting public anger over low pay and job insecurity for ordinary workers.

“Individuals cannot opt out of the rights they are owed, nor can an employer decide not to afford individuals those rights,” said a spokesman for the department of Business, Energy and Industrial Strategy when asked about Deliveroo.

Workers in Britain aged 25 or over are entitled to receive the national living wage of 7.20 pounds, but those who are self employed do not. Two drivers for taxi app Uber have taken the firm to an employment tribunal in Britain, arguing they should get holiday and sick pay.

The Deliveroo dispute in Britain follows two years of court and regulatory battles in Silicon Valley, the spiritual home of tech startups, over how dozens of on-demand delivery companies pay drivers as contractors rather than as full-time employees. (Editing by Jane Merriman)