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Summary
- Standard Life Aberdeen Plc and Aviva Plc have shunned Deliveroo’s IPO over concerns of workers’ rights.
- Aberdeen and Aviva together manage funds worth £800 billion.
Standard Life Aberdeen Plc (LON: ADIG) and Aviva Plc (LON: AV) have decided to stay away from Deliveroo’s £8 billion IPO, which is one of the most awaited IPOs in 2021. As per media reports, the two biggest institutional investors have refused to put in their money in the food delivery company over concerns of workers’ rights.
Deliveroo defines its riders as self-employed, which does not make them entitled to basic rights like sick and holiday pay or a minimum wage. This case is similar to that of technology giant Uber Technologies Inc (NYSE:UBER), where workers had approached the courts demanding basic workers’ rights,
Uber’s case
Recently, Uber lost the landmark case against some of its drivers who dragged the ride-hailing company to the courts demanding basic rights as workers and not as self-employed. In February, the UK Supreme Court pronounced that drivers should be considered as workers and not as self-employed and are entitled to social welfare benefits.
Following that, Uber announced that it would now classify its drivers as workers and not as independent contractors, and they will be entitled to minimum wage, holiday, and pension benefits.
Though Deliveroo’s IPO is being keenly followed, investors have started feeling jittery over its £8.8 billion valuation that the company has got, without making any profits to back up such a valuation. Aberdeen’s UK Equities’ head Andrew Millington said that the working conditions of Deliveroo’s drivers were a serious red flag and is making it uncomfortable over maintaining a workforce like that.
Investors are jittery
Aberdeen and Aviva together manage funds worth £800 billion. Aberdeen has recently sold off its shares in Boohoo Plc (LON:BOO) on allegations that the later exploited its workforce. Millington added that at times to pull out of companies or choosing to not invest are the only options that one can exercise.
Also read: Uber Canada Proposes Flexible Work+, Receives Mixed Reaction
David Cumming, Chief Investment Officer, Aviva, said that investors were now a lot more serious about their social responsibilities. He said that it is important to observe how companies treat their workforce as a fixed minimum wage, and working hours could improve the lives of workers in a big way.
Deliveroo has responded to the concerns saying that the company gave workers the flexibility to choose their working hours and that it would also include certain special benefits for its drivers in the IPO due next month.
Also read: How Supreme Court’s Latest Order Will Change Uber’s Business Forever
Big names in the gig economy, like Deliveroo and Uber, are believed to have been embroiled in as many as 40 legal battles across the world. Workers have dragged the companies to courts to secure basic working rights for themselves. Millington said that whether Deliveroo can find investors in the long term would definitely depend upon its stand on workers’ rights.
Some other experts also pointed out that given the Uber case, institutional investors should be careful while investing in such companies. Recently, Italy has ruled against Deliveroo and has asked it to pay up backdate benefits between 2015 and 2020. But Deliveroo has appealed against the judgment. But if it loses the case, that would be again a lesson for the companies.
