Small Business

Food start-up Deliveroo to spend $13 million on driver medical insurance but stops short of other benefits

Shafi Musaddique
Jack Taylor/Getty Images

Deliveroo is handing out free medical insurance for 35,000 food delivery drivers worldwide, but stopped short of giving further benefits in what it said could risk the self-employed status of workers.

Drivers in 12 countries, including the U.K., Singapore, the United Arab Emirates and Hong Kong, will receive an insurance package that will cover up to three quarters of their average income if they suffer an injury while delivering food.

Deliveroo said Tuesday that it was spending an initial amount of $13 million to cover drivers for medical expenses of up to $10,000, at no cost to its workers.

The start-up said that it would like to introduce further benefits to food delivery workers but risks counting them as contracted staff rather than self-employed workers, which the company currently does.

"We know riders value the flexibility of being able to fit their work around their life, but they also deserve security if they're involved in an accident," Deliveroo founder and CEO Will Shu said in a statement announcing the insurance scheme.

"We would like to go further, but are currently constrained by the law".

Deliveroo and a number of other food-delivery apps, including Uber Eats, have come under fire for providing insecure work and limited worker rights in what has been dubbed as the growing number of 'gig economy' jobs.

Companies say that gig economy jobs offer flexibility for workers, while unions argue that those in jobs such as food deliver services work long hours with no holiday or sick pay.

A union representing Deliveroo's British workers said that companies must do more to tackle the economic and social insecurities caused by gig economy jobs.

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"Deliveroo finally appears to be taking the safety of its workers seriously," Mick Rix, a representative at GMB Union in the U.K., said in a statement.

"But the company, along with other gig economy employers, must wake up to its other responsibilities and pay the national living wage for all time worked along with holiday and sick pay."

In the U.S., employee benefits account for more than 30 percent of an employee's cost to his or her employer. These benefits generally are not offered to independent contractors.