New EU legislation set for implementation by December 2 will force a shift in how food delivery workers are classified, moving many from self-employed contractors to employees. This transition, aimed at curbing the misuse of gig-economy labor, is expected to increase operational costs for restaurants and delivery platforms, likely resulting in higher menu prices for consumers.
The Shift from Contractor to Employee Status
The reclassification of delivery workers follows a landmark 2024 Supreme Court ruling in The Revenue Commissioners v. Karshan (Midlands) Ltd. t/a Domino’s Pizza. Dr. Eddie Keane, an assistant professor in employment law at the University of Limerick, notes that this decision clarified that many workers previously labeled as independent contractors were, in legal terms, employees. This change carries significant economic weight. “Everything comes at a price,” Dr. Keane told RTÉ’s This Week. “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.”
Revenue has already moved to address these legacy issues. Following the Supreme Court judgment, the agency provided a disclosure window for businesses to reclassify staff. Preliminary data from Revenue indicates that 286 employers have already reclassified over 6,600 workers, resulting in tax adjustments exceeding €26.7 million.
Did you know?
Irish households order an average of three takeaways per month, contributing to an estimated €2.2 billion annual spend on food delivery and takeaway orders, according to figures from Just Eat.
Impact of the EU Platform Workers Directive
By early December, Ireland is mandated to transpose the EU’s Platform Workers Directive into law. While this does not cover every gig worker, it introduces specific protections for those operating through digital platforms like Deliveroo, Just Eat, and Uber Eats. Dr. Laura Bambrick, head of Social Policy and Employment Affairs at the Irish Congress of Trade Unions, argues this is a necessary intervention. She points out that under the current contractor model, workers lack basic rights like minimum wage, sick pay, and pension contributions.
“The tab is being picked up by the army of young, mostly migrant workers who are out on their bicycles working at all times,” Dr. Bambrick said. She added that the state also loses out on hundreds of millions in employer PRSI, which funds contributory social welfare benefits and pensions.
Operational Challenges for Local Restaurants
For restaurant owners, the flexibility of the current app-based delivery model has been a key driver of growth. Adam Clancy, general manager of two Doh Pizzas and two Zambreros restaurants in Limerick, explained that hiring in-house delivery staff lacks the scalability of third-party platforms. “There’s going to be some weeks where you’re doing loads of deliveries, other weeks it drops off a little bit,” Clancy said. “It varies massively from week to week.”
Gary Huymh, head chef and owner of Sambros in Limerick, echoed this sentiment. He noted that the apps allow restaurants to avoid the overhead of managing a dedicated delivery fleet during slow periods. However, as the legal landscape shifts, these businesses face the reality of rising costs. With the “social benefit” of employee status comes an “economic cost” that is likely to be passed on to the customer.
Frequently Asked Questions
Why are delivery workers being reclassified?
Following the Supreme Court’s ruling in the Karshan case, it was determined that many workers previously treated as self-employed were actually employees. The new EU Platform Workers Directive further mandates protections for those working via apps.
Will my takeaway order get more expensive?
It is likely. As restaurants and platforms transition to an employment model, they must cover social insurance, holiday pay, and other benefits, which is likely to lead to increased delivery costs for consumers.
Does the new directive apply to everyone?
No. The EU Platform Workers Directive specifically targets those working for digital platforms. It covers areas such as algorithmic management, data protection, and employment status, rather than all gig economy roles.
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