New directive for delivery workers could see prices rise

A new European Union directive set to be implemented by December will significantly alter the classification of delivery workers, transitioning them from self-employed contractors to employees. This legislative shift is anticipated to lead to increased prices for takeaway meals as businesses face new employment-related costs.

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The way the people are working is changing and the legislation needs to change to catch up with it.

Dr. Eddie Keane, an assistant professor in employment law at the University of Limerick, explained that the changing nature of work necessitates updated legislation. He noted that previously, delivery drivers classified as independent contractors bore many of the associated costs, including lower pay and the absence of social insurance or holiday pay. The reclassification to employee status introduces obligations like social insurance contributions and holiday pay, representing an economic cost for businesses.

This directive comes in the wake of a 2024 Supreme Court decision in Ireland that redefined how delivery workers are classified. The ruling, concerning The Revenue Commissioners v. Karshan (Midlands) Ltd. t/a Domino's Pizza, clarified that many food delivery workers had been incorrectly classified as self-employed. This clarification has broader implications for the gig economy.

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Everything comes at a price and what has been happening up to this point is when the delivery drivers were being classed as independent, all of the costs of deliveries were effectively being visited upon the driver.

Following the Supreme Court judgment, Revenue encouraged businesses engaging gig economy workers to review employment classifications. Preliminary statistics from Revenue indicate that 286 employers have reclassified over 6,600 workers, resulting in substantial tax adjustments. For workers using digital platforms like Deliveroo, Just Eat, or Uber Eats, the EU's Platform Workers Directive will offer some protections, though these platforms retain the right to challenge the presumption of employment.

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Once the drivers are considered to be employees, there is going to be an additional cost to be paid. The cost of social insurance, the cost of holiday pay. There is a social benefit to that, but there is also an economic cost.