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Our Employment Department considers the High Court’s recent decision that deliveroo drivers are not workers and what this decision means for employers that allow their staff to appoint a substitute

21st December 2018

Worker Status and Personal Performance in light of the High Court’s Recent Decision in IWUGB v Central Arbitration Committee and Roofoods Limited t/a Deliveroo (an interested party) [2018]

On 5 December 2018 the High Court dealt a blow to gig economy workers who perform services with a significant right of substitution by rejecting the Independent Workers Union of Great Britain’s (the “IWUGB”) argument that Deliveroo drivers are workers. In this case, the significance of Deliveroo drivers not being workers is that their Union cannot be recognised for collective bargaining purposes regarding holiday, pay or hours. More broadly, worker status can impact entitlement to other statutory rights including holiday and sick pay.

The meaning of worker

To be a worker a person must meet specific requirements that are set out in the Employment Rights Act 1996 (the “ERA”). One way of acquiring worker status is to be a normal employee who is under an obligation to provide and accept work and to work under the employer’s supervisory control (section 230(3)(a)). A second way of acquiring worker status is to work under a contract to provide services personally to someone who is not a client (section 230(3)(b). Owing to the growth of the gig economy, the second way of acquiring worker status has moved into the spotlight. The critical question when deciding if somebody is a worker is often whether or not that person was truly required to provide services “personally”. This was the central issue in the recent High Court case brought by the IWUGB against Deliveroo.

The High Court found that Deliveroo drivers did not provide services “personally” because they had a broad right of substitution. That is, they could enlist others to provide the services in their place. Clause 8 of the contracts that were considered by the court was titled “RIGHT TO APPOINT A SUBSTITUTE”. Within this clause it was stated “Deliveroo is not prescriptive about [the appointment of a substitute] and you therefore have the right without the need to obtain Deliveroo’s prior approval” to appoint a substitute to perform the services in the Deliveroo drivers’ place. In the High Court’s view, this broad right of substitution was contradictory to the requirement for personal performance under section 230(3)(b) of the ERA. In coming to that conclusion, the High Court were also persuaded by the fact that the only restriction on the Deliveroo drivers’ ability to appoint someone to perform services in their place was that that individual had not themselves materially or seriously breached the terms of a contract with Deliveroo in the past.

Is this a change in direction?

The High Court’s recent decision is not the first time this particular question of worker status and personal performance has been considered by senior courts in 2018. In June 2018 the Supreme Court decided that the “Pimlico Plumbers” were workers within the meaning of section 230(3)(b) of the ERA. This claim was brought in connection with an attempt to claim certain statutory rights reserved to workers and employees including holiday and sick pay.

Given that the question of employment status has always been a difficult one it is encouraging to see consistency in the way the Supreme Court and High Court in these two cases have approached the question of personal service.

Personal service was again central to the question before the Supreme Court in the Pimplico Plumbers case and this is reflected in the Supreme Court’s statement that the key question was “[w]here, then, lie the boundaries of a right to substitute consistent with personal performance”. Unlike the contracts of employment in this month’s Deliveroo judgment, the contracts before the Supreme Court did not give the Pimlico Plumbers express rights to appoint a substitute to provide services in their place. Nonetheless, in practice there was a “limited facility to substitute”. Despite Pimlico’s arguments to fend off finding that its plumbers were workers by saying that there was a broader right to substitution, the original Tribunal did not agree. Its ultimate conclusion was that “there was no unfettered right to substitute at will”.

Underscoring its feelings that there was no general right to substitution, the Supreme Court took into account that the lack of reference to substitution in the contract. This omission suggested that that right was so limited that it was not worthy of recognition.

Where are we now?

When a right of substitution will become inconsistent with worker status under section 230(3)(b) of the ERA is likely to always be a question of fact meaning the answer will depend on a case by case analysis. Nonetheless, what is now clear is that any right to substitution will not necessarily prevent worker status if there are severe limitations on the scope of that as in the Pimlico Plumbers case. Further, it is clear that courts and tribunals will pay close attention to the terms of any contract when considering the question of personal service. Having said that, the courts and tribunals reserve their position to look beyond the black and white terms of a contract where they do not reflect the reality of an arrangement between the company and its staff.

Our employment department has experience and expertise in all of the above areas.

If you would like any further information, please contact Noel Deans by email at noel.deans@rosenblatt-law.co.uk or by telephone at 0207 955 0880.

This article should not be taken as definitive legal advice on any of the subject matter covered. If you do require legal advice, please contact Rosenblatt as above