Deliveroo riders have been ruled self-employed by labour law body the Central Arbitration Committee (CAC).
The Independent Workers Union of Great Britain (IWGB) brought the test case against the delivery company.
The CAC ruled the riders were self-employed because of their freedom to "substitute”, allowing other riders to take their place on a job.
The case follows a recent Employment Appeal Tribunal (EAT) victory by Uber drivers, in which the company lost an appeal against an earlier decision to grant the drivers workers’ rights.
IWGB brought the case after it had asked Deliveroo to recognise it as a union representing drivers in Camden and Kentish Town and to start collective bargaining over workers’ rights. The case was taken to the CAC after Deliveroo refused.
The company said its delivery "Roomen" and "Roowomen" wanted to keep flexibility of being self-employed. However, the IWGB said the ruling showed that Deliveroo riders were not satisfied with their current terms and conditions and wanted workers’ rights, including holiday pay and the minimum wage.
A decision by the CAC can be challenged in the High Court on a point of law.
IWGB general secretary, Dr Jason Moyer-Lee, said: "It seems that after a series of defeats, finally a so-called gig economy company has found a way to game the system."
"On the basis of a new contract introduced by Deliveroo’s army of lawyers just weeks before the tribunal hearing, the CAC decided that because a rider can have a mate do a delivery for them, Deliveroo’s low-paid workers are not entitled to basic protections."
Dan Warne, managing director for Deliveroo in the UK and Ireland, said: "This is a victory for all riders who have continuously told us that flexibility is what they value most about working with Deliveroo.
"As we have consistently argued, our riders value the flexibility that self-employment provides. Riders enjoy being their own boss, having the freedom to choose when and where they work, and riding with other delivery companies at the same time."
Deliveroo said it was pressing to have employment law to be changed in order for it to offer its self-employed riders injury pay and sick pay.
Emma O’Leary, employment law consultant for the ELAS Group, said: "Tuesday’s ruling in favour of Deliveroo comes in stark contrast to the Uber outcome last week. The CAC adjudicates on recognition for unions for collective bargaining purposes and this application was brought by the IWGB looking to gain recognition by Deliveroo. Presumably, if they had been successful, the Union would be attempting to garner support throughout the gig economy.
"In order to have been successful in their application, the Union needed Deliveroo riders to be classified as workers. The CAC appears to have considered the employment status tests and found that substitution was the Union’s downfall. It is well established principle that a contractor who doesn’t have to carry out the work personally but can send an alternative person to do the job, i.e. a substitute, is unlikely to be a worker, someone has to perform the work personally.
"The CAC found evidence that Deliveroo riders can in theory send someone else to do the work for them and this was the crux of their decision. As they are able to send substitutes, the riders must therefore be self-employed, meaning they do not have the right to paid holiday pay, SSP or even the National Minimum Wage or National Living Wage.
"We should note that this is not a binding authority for employment law purposes as it is a CAC ruling rather than a tribunal. However, there is an ongoing claim with the Employment Tribunal that was brought by 45 Deliveroo couriers. It will be interesting to see the comparison between this ruling and the tribunal’s when the case is eventually heard."