An incoming change in the law may soon mean that businesses that lean into gig economy subcontractors for deliveries will be liable for the state of the vehicles used, potentially sharply impacting a firm’s ability to hide from the liability attached to any incidents.
Food delivery firms in particular have long been criticised for taking little responsibility for their rider vehicle fleets. As the rider is not directly employed, all liability for the state and road-legality of a vehicle lies with the subcontractor, shielding the source of the product demand from any comeback, should the emergency services get involved.
Now a change to the Border Security, Asylum and Immigration Act 2025, Section 48 will seek to expand the liability from just ’employment’ to additionally cover ‘other working arrangements’. Royal assent was granted for this legislative change on December 2nd, 2025.
While this change may be intended primarily to combat immigration offences, it will also likely close loopholes around a business’s responsibility for who it directly or indirectly employs, and who gets subcontracted down the chain. In turn, this aligns the law on things like an employer’s responsibility to ensure vehicles used by staff are safe and road legal.
This legal text change looks set to come into play from October 1st and the ramifications are dire for businesses not complying with the changes. If successfully applied in law, a business will become liable for the potentially many layers of subcontracting that can happen in the gig economy model.
Essentially, the liability affects any business buying services from delivery workers, the new legislation mandating that the buyer must know who they are dealing with and contracting to deliver their goods. The fine for non-compliance is set first at £45,000 per worker and at £60,000 per worker thereafter, following the first offence, a tally that would be catastrophic for the many food delivery firms that are only just turning profitable, if applied in any great volume and consistency. These fines apply even if there was no direct contact between the delivery source and the end provider.
From now, identity assurances must apply, though delivery firms claim they already do, having made voluntary commitments.
Those commitments seemingly have not addressed the issue as in future, ‘proportionate systems’ to confirm the identity of the person actually completing the work must apply by law. The Home Office is suggesting no less than verification every 24 hours in order to beat a pattern of bypassing checks. It stands to reason that if a rider has no lawful status, then likewise they have no incentive to ride a road-legal vehicle if speed is a determining factor in recouping a liveable wage. Cheaper kit or complete electric bikes tend to most commonly be the vehicle of choice and these are often non-compliant, sold direct to market via mass marketplaces, rather than via reputable bike shops whose insurances will only cover the sale and upkeep of road-legal goods.
Why are we talking about this on a website dedicated to electric bikes, you might ask? Well, if you’ve been reading along these past few weeks, you will have spotted a handful of Cycling Electric investigations into the gig economy model and how low pay structures tend to result in subcontractors opting for often cheap and fast conversion kits, or direct-market electric vehicles that can bypass local road laws. In the past 12 months, 31 UK police forces have seized 7.049 non-compliant vehicles, but enforcement is fragmented nationally, with London accounting for 2,367 via the MET and 800 via the City of London force.
Often these are wrongly branded ‘e-bikes’; they’re not, but nonetheless this conflation has harmed the reputation of the road-legal e-bike sector.
Gig economy vehicles and the link to pay per drop
In most cases, the gig economy vehicles more closely align with light electric vehicles like mopeds in terms of the category of power. Thus, they need a licence, registration, insurance and a number plate. That typically doesn’t get adhered to, which means a good portion of delivery riders are committing offences daily while working, and arguably are incentivised to do so by the pay structures.
Relevant to this discussion are an employer’s health and safety obligations to workers when it comes to vehicle safety. With this adjustment to a firm’s responsibility for the worker, closer scrutiny will be invited on the link between non-compliant vehicles and who is liable for them.
During our time spent speaking with gig economy delivery riders in London, Cycling Electric uncovered examples of the pay-per-drop model paying only between £2 and £3 per drop, which at a rate of three drops per hour, would leave the average worker earning below minimum wage levels for London.
One drop every 20 minutes, at least on a road-legal two-wheeler, would be a good effort for any fit rider, yet even with a throttle this delivery rate seems close to its limits given the delivery acceptance, waiting time, pick up, then onward delivery to a new location. Cycling Electric has heard from delivery rider sources that premium ticket deliveries are getting less common as greater supply of riders emerges and has also seen evidence of orders being bundled together if picked up from the same location, leading to lower rates than would be achieved if collected as two separate orders.
This week, a Deliveroo spokesperson seemed to confirm our investigation’s findings within a Parliamentary group discussion, outlining that the minimum pay per drop from Deliveroo was ‘£2.90’. It’s reasonable to conclude from this that the maximum a rider could earn per hour on this rate would be £8.70, a rate that falls even below the £10.85 minimum for an 18 to 20-year-old and well below the £12.71 rate for an adult above 20. The London Living Wage is now set at £14.80 an hour. It is worth noting too that freelance workers are responsible for their own sick days, pension planning and holiday pay, so the pay figures are, in reality, lower than stated.
Looking overseas, one of the best examples we have to date of the trend for delivery firms to lean into undocumented workers is a French Sante-Course study of 1,004 riders that found 64% were undocumented. This figure, it can fairly be said, may be lower than the reality on account of many respondents not wishing to disclose their status. These workers, it was found, averaged 63 hours of work per week for ten months of the year. Naturally, the accident profile was high; over half had experienced accidents.
It is well documented that delivery workers who have successfully registered on delivery apps can then subcontract their accounts to undocumented riders, often at a rate of up to £100 per week.
In Australia, where the pains of the gig economy model are shared, collective action has recently resulted in a new wage floor being applied across the sector, rather than the pay-per-drop model persisting. This, in turn, takes the urgency out of the delivery process and reduces the incentive to ride an illegal vehicle.
The damage done to the reputable electric bike sector on account of a widespread conflation of vehicle types is palpable. Cycling Electric has spoken with bike shops who, despite turning away illegal vehicles for service, have seen their insurance costs rise as coverage buys into the conflation narrative, particularly around fire risk, rather than speed. The same pattern has been seen with landlords banning electric bikes from properties, and employers doing the same, stunting the potential of the electric bike as a transport solution at a time when congestion costs the UK economy £10 billion every year.
For the Treasury, it is important to note that the cycling industry has similar economic worth than the UK steel industry, so ongoing harm to a key revenue stream is described as an ‘existential risk’ to the sector.