Deliveroo shares fall to record low in response to EU plan on gig economy

European Commission plan to act on gig workers is putting pressure on the takeaway delivery and ride-hailing sectors

Deliveroo and its rivals such as Just Eat are under pressure after the European Commission revealed last week it plans to push countries to reclassify as many as 4.1m gig workers as employees. File picture

Deliveroo shares plunged 6.5% to hit a record low during Monday’s session in London, and takeaway food delivery rivals Just Eat and Delivery Hero also fell about 5% in Amsterdam and Frankfurt, on fears of the European Commission’s proposal concerning employment rights and the status of gig economy workers hitting profitability of these companies.

“It is essentially a move to try and do away with the gig economy and ensure all employees everywhere are captured by employment legislation,” said Stuart Cole, head macro economist at Equiti Capital.

This obviously raises costs and impacts on both profitability and flexibility. 

The new share price fall comes after the Commission last week revealed it is set to push countries to reclassify as many as 4.1m gig workers including food couriers and ride-hailing drivers as employees regardless of what their contracts state.

Platforms, rather than workers, would be responsible for proving they are not employees. The proposal, due to be fully published this week, will be “grist for the mill of those wanting the gig economy to be eradicated,” Jefferies analyst Giles Thorne and colleagues wrote in a note to clients last week.

Deliveroo shares have had a difficult time since they debuted on the London stock market earlier this year and it is now valued at £4bn (€4.7bn). Most takeaway delivery food firms’ shares have fallen since the start of the year as investors try to work out where the firms will tap major growth after many Covid restrictions for in-house dining were removed across Europe this year.

Shares in Just Eat — whose full name is JustEatTakeaway — are also traded in the Netherlands and it is valued at €25.7bn.

It tweeted last week “as Europe’s largest food delivery platform” it supports the EU’s proposals. Delivery Hero is valued at €24.3bn.

• Irish Examiner, Reuters, and Bloomberg