Meal delivery company Deliveroo has put aside over £112 million (AU$202 million) to deal with legal battles with its delivery riders in the UK.

Deliveroo is preparing for a stock market listing in London, and has had to warn potential investors of the risk of litigation over the employment status of its delivery riders

The documents prepared for the stock market debut value the company at more than AU$7 billion (£5 billion).

The firm relies on over 100,000 riders worldwide, but it has gone to lengths to deny they are employees, labelling them independent self-employed contractors. This means that they are not entitled to benefits like holiday pay or the national minimum wage, except in parts of the Middle East. 

Legal action has been launched over the status of delivery riders in the UK, France, Spain, the Netherlands and Italy.

The company could be forced to make a significant payout if its planned appeals fail, saying; “While we defend ourselves robustly in such cases, we recognise the inherent uncertainty connected to regulatory inspections and investigations.”

The company has also announced it is preparing a AU$28.9 million (£16 million)  “thank you fund” for a quarter of its riders.

The payments will go to riders who have worked with Deliveroo for at least a year and completed at least 2,000 orders. 

Payments should go out in all 12 of the countries where the firm operates, on a sliding scale from a minimum of AU$361 (£200) to a maximum of AU$18,080 (£10,000), depending on the number of orders that riders have delivered. 

Deliveroo is offering cash payouts to riders because it legally cannot give them shares in the stock market launch, as it does not consider them employees.

From this week, Deliveroo customers will be offered shares in the planned flotation, to be purchased though the company’s app under an offer it calls “great food with a side of shares”.

Alex Marshall, president of the Independent Workers' Union of Great Britain (IWBG), which represents the rider, says the handouts did not account for years of poor pay and conditions. 

“This is just another PR stunt by Deliveroo to try and divert attention from a workforce that has been exploited since the company’s inception,” he told reporters.

“This does not come close to compensating riders for a lifetime of precarity and poverty pay. They should call it their apology fund. If they wanted to thank these key workers, how about they guarantee minimum wage, a fair terminations process and basic workers’ rights?”

The situation in the UK has been used by Australian unions to argue for more rights for gig economy workers.