The managing director of Deliveroo in the UK has told MPs that bolstering the employment rights of its riders would add about £1 to each food order.
Dan Warne made his comments while giving evidence to the Business, Energy & Industrial Strategy (BEIS) Committee, which has been examining working practices in the “gig economy”, where workers have no fixed hours or contract.
Uber’s head of policy in the UK, Andrew Byrne, also gave evidence – and warned National Insurance contributions alone would add tens of millions of pounds to the ride-hailing app’s costs.
Both companies have been forced to defend their treatment of workers, denying their are exploitative and insisting they give people flexibility.
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Critics of the gig economy, who said a Government-ordered review this summer fell short of meaningful recommendations, argue they should be forced to give holiday pay, National Insurance contributions and meet low pay rules governing employers.
Uber said it was expecting before Christmas the result of an appeal it submitted in the case of two drivers who won a UK tribunal on workers’ rights.
The union backer in the case has said the final ruling could set a precedent for millions of people on their employment rights.
However, any decision against Uber may have only a limited impact on the ride-hailing service.
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Uber is also continuing to battle Transport for London over a decision to strip it of its operating licence in the capital on the grounds it is “not fit and proper”.
London is currently Uber’s biggest European market.
It has approximately 50,000 drivers in the UK, while loss-making takeaway delivery firm Deliveroo has about 15,000 people on its books.
Mr Warne told MPs that Deliveroo had a high rate of rider departures, despite bowing to pressure earlier this year by overhauling the “supplier agreement” it uses to set out the terms on which its couriers are employed.
It wants the law to be changed to allow sick pay and other benefits so long as riders can maintain flexible worker status.