Published Article

HeadlineThe Real Price of Deliveroo’s Success: Inside the Substitute Clause Controversy

Short HeadlineThe Truth behind Deliveroo's Profit Model

StandfirstDeliveroo has announced its sale to U.S. rival DoorDash, but concerns linger over the controversial ‘substitute’ feature at the heart of its operations.

Deliveroo, the London-based food delivery giant, has just been bought by DoorDash for a staggering £2.9bn.

Recent reports have been focusing on the negative impact this might have on the UK economy, with yet another big name being sold to a U.S. firm. Beyond the headline-grabbing sale, critics argue that long-standing concerns around Deliveroo’s business model deserve a second glance.

In 2025, Deliveroo was included in a list of businesses most frequently linked to allegations of migrant worker abuse, according to the Migrant Worker Allegations Database. Pressure is now mounting on the company to address how the existence of its ‘substitute’ feature may have contributed to what experts describe as exploitative working conditions.

“If this issue got the attention that it deserved, the substitute feature would have been shut down overnight.”

Zamir Dreni, President of App Driver and Courier’s Union.

The Legal Loophole at the Heart of Deliveroo’s Business Model

The lucrative potential of the company lies with attempts to maintain the status of its drivers as self-employed contractors rather than workers. In its 2024 annual report, Deliveroo made this clear: “our business would be adversely affected if changes in law required us to reclassify our riders as employees”.

Unlike Uber drivers, who secured worker status in a landmark 2018 case – entitling them to minimum wage, paid holidays, and protection under working time regulations – Deliveroo riders remain excluded. The Independent Workers’ Union of Great Britain (IWGB) has spent seven years challenging this. But after three failed lawsuits, the Supreme Court sided with Deliveroo in 2023.

The decisive blow? A clause Deliveroo inserted into its contracts just before the original hearing in 2017, allowing riders to rent out their accounts to ‘substitutes’ that could carry out deliveries in their place.

The Court ruled that such an arrangement was ‘incompatible’ with the obligation to provide a personal service – essential to worker status under UK law. Paris Smith LLP called this approach “clever,” noting it significantly reduced Deliveroo’s legal exposure to worker status claims.

Invisible and At Risk: Substitutes in the Gig Economy

Clause 8 of Deliveroo’s contract puts full responsibility on the account holder to ensure their substitute has a clean criminal record and the right to work in the UK. But for workers still fighting for a £12-per-hour pay floor, this seems to be an unrealistic expectation.

Pedro Mendonça, a professor at Herriot-Watt University who specialises in digital platform work, conducted a study involving 31 food couriers. Six of which had rented their accounts out to undocumented migrants, while five were themselves substitutes without proper documentation. He found that the substitute feature had given rise to informal arrangements, some of which he said could potentially breach employment or immigration laws.

Wage theft is the most significant issue that riders are facing, according to Mendonça. The informal nature of the agreement means that the account holder can increase rent, cancel the account or fail to pay the substitute at all. The self-employed status of riders means that substitutes cannot make claims at employment tribunals if they do fall victim to issues at work.

For this reason, Mendonça dubs them “invisible workers”, who are “completely at the mercy of their account holders – invisible to the institutions, to the courts and to the platforms”.

Zamir Dreni, president of the App Driver and Courier’s Union (ADCU), said he has encountered multiple instances of what he described as “organised account-sharing groups,” adding that riders have expressed fear of being reported due to precarious immigration status. When asked how often he encounters riders without the correct paperwork, Zamir responded “Every day. Every single day”.

While the Central Arbitration Committee stated in the 2023 ruling that hardly any riders use substitutes, social media tells a different story. There are now over 250,000 members of Facebook groups across the UK where Deliveroo accounts are actively being rented out.

To enter the app as an account holder can take over three years, according to multiple Facebook and Reddit threads, which makes the substitute feature a necessity for some riders. ADCU’s Zamir Dreni noted:

“You can rent accounts from anywhere, starting from Gumtree to Facebook. I can get one within the next 10 minutes, 20 accounts, 100 accounts. No problem”.

Dreni went on to say that the feature ends up suppressing rider’s pay through illegitimate competition: “It doesn’t matter how hard you try when you’re competing with someone who has four phones, four different accounts. The companies allow it because that’s where they make their money”.

Government Crackdown on Illegal Working Misses the Mark

The UK government announced a ‘tough’ new policy for the gig economy in March, proposing fines of up to £60,000 for businesses that fail to carry out proper checks on their workers. In the very same announcement, Deliveroo were commended as a model employer, noting that the “company already voluntarily carry out checks to ensure their delivery drivers are eligible to work”.

Deliveroo have been using digital ID verification technology on their app since 2021. This is the very same technology that was in place two years before 42% of riders stopped by enforcement teams over a week were found to be working illegally, according to a 2023 Freedom of Information request.

Mendonça explained how easy the system is to circumvent: “When the substitute gets the prompt, the account holder logs on and takes the selfie himself”. He thinks the checks are just a company act to show the regulators they are doing something.

Zamir Dreni agrees that the government and company response so far has been a sham. The ADCU have drawn from research by MIT and the Alan Turing Institute which found that facial recognition technology is up to 19% less accurate when matching faces of colour. He likened the implementation of this software to the company’s crackdown in February on 100 riders who shared their account with illegal workers, calling them both PR stunts.

James Farrar, Director of Worker Info Exchange, argued that the government’s endorsement overlooks unresolved systemic issues, linking gig economy firms to a backlog of over 23,000 modern slavery cases recorded by authorities.

The government evidently views digital ID checks as sufficient to resolving the chasm of issues at hand with the gig economy. But for many riders, these measures fall short of addressing a system already skewed by opaque pay structures decided by algorithms.

In 2024, Deliveroo became the first food delivery company to block riders from using Rodeo – a popular third-party app that allows couriers to track and compare their earnings based on millions of shared order data points. Deliveroo claimed the ban was due to unauthorised access to its platform, but Rodeo argued otherwise.

The company pointed out that, unlike other delivery platforms which continue to cooperate, Deliveroo had quietly rewritten its rider contracts to restrict external data sharing. “The authority to access a rider’s account is given by the rider, whose data it is,” Rodeo’s co-founder Alfie Pearce-Higgins told the Financial Times.

Business, Government and Legal – who should be held responsible?

At Deliveroo, like many gig-economy platforms, human interaction is largely absent from the day-to-day operations. Employment of substitutes, customer concerns and criminal background checks– all of these are carried out via a digital platform. Perhaps this is why the UK government continues to stumble when it comes to holding gig economy giants accountable for labour abuses.

Just three months ago, HMRC responded to a rider’s concern on a public forum with advising that riders should be using their own accounts, not working as substitutes under someone else’s name. Yet, critics argue that Deliveroo’s contractual model – particularly the substitute clause – facilitates a system in which informal labour practices can flourish unchecked, despite official platform policies.

Pedro Mendonça says that gig-economy platforms like Deliveroo are seen as “exceptional” in society. They are at the forefront of technological development, they are the “future”, and so they’re making up their own rules as they go along.

However, Mendonça argues that the reality represents a regression rather than progress. He contends that companies like Deliveroo, operating in a legal grey area, are eroding hard-won employment rights and reviving exploitative, unregulated labour conditions reminiscent of the early 20th century.

At the heart of this issue is Deliveroo’s ‘substitute’ clause. From potential breaches of the Modern Slavery Act to safety risks for customers, the implications are far-reaching. But this isn’t just about one company. It’s about recognising how digital platforms are slowly rewriting the rules of work—and asking whether we’re ready to confront what that really means.

When approached about these allegations, a Deliveroo spokesperson told City News:

“Deliveroo has led the industry in taking action to secure our platform against illegal working, developing our approach in close collaboration with the Home Office.

The spokesperson added: We were the first to roll out direct right to work checks and a registration process for substitute riders backed up by daily identity verification checks. We are currently rolling out additional device ID checks for all riders and will continue to strengthen our controls to prevent misuse of our platform”.