Previously, Just Eat couriers were employees, meaning they were entitled to a minimum wage, set shifts, sick and holiday pay from the company.
Going forward, couriers will work for the firm on a self-employed, gig worker basis.
An estimated 1,870 workers will be impacted the move; 1,700 couriers who have been given six weeks’ notice of the change, and 170 in operations.
Those affected will be able to re-apply to for contractor roles at the firm.
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According to Reuters, the decision was made to prevent Just Eat from being at a competitive disadvantage to the likes of Deliveroo and Uber that use the self-employed model for their delivery workers.
Kate Palka, lawyer at The Legal Director, said the move echoes other fire and rehire strategies.
Speaking to HR magazine, Palka said: "Think P&O: a large employer willing to take the legal and reputational risks involved in a fire and rehire strategy because it is economically advantageous.
“Just Eat's proposal to dismiss employees and offer the work to those willing to take on the burden and comparative financial and legal instability of self-employed status reflects a backlash against the move towards increasing rights and protections for those working in the gig economy.”
Just Eat expanded its offer of employment contracts in the UK in 2021, adopting the model in Liverpool after finding success with it London and Birmingham.
Palka added any employee with less than two years’ service at the company will have no recourse for a fair dismissal claim due to the change in work model, and anyone with the right to seek recourse would be likely to win a reduced reward.
She said: “Those employees with more than two years' service who refuse to take a self-employed role and bring a successful claim may well find themselves with a reduced award because they failed to reduce their losses by taking up that offer.
”In the context of sharply rising costs and increasing competition, this may well be a strategy that will be repeated."
Given legal battles over employment status in the UK, such as Uber’s 2021 Supreme Court ruling Seb Maley, CEO of IR35 consultancy Qdos, argued Just Eat's decision may also have tax compliance implications.
Speaking to HR magazine, he said: “This isn’t an issue if the couriers’ working practices reflect self-employment. However, in the gig economy, there’s been mass confusion over employment status and whether gig workers are genuinely self-employed or should hold ‘worker’ status.
“If these couriers work in a manner that doesn’t reflect self-employment, then Just Eat could be exposed.
"We’ve seen so many employment tribunals in the gig economy, where individuals – whether Uber drivers or Deliveroo riders – have campaigned for employment rights. So, watch this space.”
If legal challenges are brought against Just Eat on the basis of couriers’ contract change Stephen Moore, head of employment at Ashfords, said a decision on true worker status will be the first step.
Moore told HR magazine: “If staff decide to bring a claim, the employment tribunal will look at the terms of the engagement, not just the contract between the parties, to determine the reality of that relationship.
"The tribunal considers aspects of the relationship such as: integration, control, substitution, etc. If the reality is that staff are not genuinely self-employed, then Just Eat could face multiple claims being brought against them.
“This could be extremely costly for the business (as they would need to pay financial compensation and the associated legal costs)."
Just Eat operates in five countries in mainland Europe, including France and Spain.
Within the European Union its couriers will still be employees rather than self-employed contractors.
Feeling the pinch from the economy other UK employers, including Royal Mail in November last year, have been making moves to reorganise staff contracts and save on costs.
