Deliveroo worker status judgment: implications for other employers

The Supreme Court has handed down its decision in the long-running dispute between Deliveroo and the union representing many of its riders. 

Background

In 2016, the Independent Workers Union of Great Britain asked Deliveroo to enter into collective bargaining with it in an attempt to improve the terms and conditions of its members. Deliveroo refused, and the union applied to the Central Arbitration Committee (CAC) for an order to compel Deliveroo to do so. It had to meet a number of conditions to succeed. One of these was that the people the union wanted to represent were workers within the meaning of the Trade Union and Labour Relations (Consolidation) Act 1992.

The CAC examined the relationship between the riders and Deliveroo and decided that they were not workers. The union appealed. They lost at the High Court and in the Court of Appeal and then appealed to the Supreme Court. The union accepted that the riders didn't meet the statutory definition of workers but said that this omission breached the riders' rights under article 11 of the European Convention on Human Rights (ECHR) which protects freedom of peaceful assembly and association. 

Supreme Court decision

The court accepted that what amounted to an ‘employment relationship’ in Article 11 could be wider that than the statutory definition adopted by the UK. But it found that there was no employment relationship in this case.  

The riders entered into a ‘supplier agreement’ with Deliveroo which set out the terms of their arrangement. They had an absolute right to accept or reject work, could work for competitors, didn't have to display any Deliveroo branding, had to submit invoices for the work they had done, account to HMRC for tax and NI and take out third-party liability insurance. 

But the killer blow was the substitution clause. Riders were allowed to ask a substitute to do any work for them - they didn't need Deliveroo's permission, they could make a profit from this by paying the substitute less than they earned, and the company didn't police this in any way. The court accepted that this clause was genuine, was used by some riders and reflected the reality of the arrangement.

This was enough to dismiss the appeal. However, the Supreme Court went on to say that workers who did have an employment relationship under Article 11 don't have a right to insist that their employer has to collectively bargain with the union of their choice. Member States have a wide margin of appreciation on this point and the UK had elected to deal with this issue via provisions set out in TULRCA.

Implications for other employers

This is an important decision for all employers who engage staff as self-employed contracts, including the gig economy sector. 

1. Right of substitution is the key to deciding employment status

In order to be a worker, an individual has to establish:

• that they have to do the work personally; and
• the person or organisation they are working for is not a client or customer of a business they are running.

Additional concepts such as mutuality of obligation and control are also required if the individual asserts they are an employee (and are therefore entitled to additional employment rights).

This case makes it very clear that if an individual has a genuine and unfettered right to get someone else to perform work they've agreed to do, they cannot be a worker or an employee. And, a tribunal will only consider other relevant factors where the worker doesn't have a right to appoint a substitute or where the right to appoint a substitute is heavily qualified. 

The impact of this decision therefore will impact all cases where worker status is in issue.

2. Employers have a wide discretion about which unions to recognise

In terms of collective consultation, the Supreme Court has made it very clear that employers are free to choose which unions it wishes to recognise, even if this is at odds with the wishes of their staff. 

How we can help

We can review the contractual arrangements with your staff and identify any status issues that could be challenged. We'll work with you to reduce your liability and protect your business. Please speak to Sybille Steiner for further information. 

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