Employment status and the right of substitution - Deliveroo drivers not "workers" says Supreme Court

The case has significant implications for the status and rights of gig economy workers in the UK, but also impacts consultancy and contractor relationships across all industry sectors.

Background

The Union sought to represent the Riders in negotiations with Deliveroo over their pay and working conditions, but Deliveroo refused to recognise the Union as a bargaining agent. The Union applied to the CAC for recognition under Schedule A1 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), which provides a statutory framework for collective bargaining between employers and trade unions. However, a key condition for recognition under Schedule A1 is that the workers in question must fall within the definition of "worker" in section 296 of TULRCA, which requires an obligation of personal service.

The CAC found that the Riders did not meet this definition, because they had an unfettered right to substitute another person to perform their deliveries, which was incompatible with personal service. The CAC also rejected the Union's alternative argument that the Riders were entitled to collective bargaining rights under article 11 of the European Convention on Human Rights (ECHR), which protects freedom of association and the right to form and join trade unions. Although article 11 superficially suggests these rights are enjoyed by everyone, the European Court of Human Rights has determined that, in practice, they are limited to those in an "employment relationship". That phrase has an autonomous meaning for the purposes of the ECHR, and requires a certain degree of subordination and mutual obligations between the parties. The CAC held that the Riders did not have such an employment relationship within the meaning of article 11.

Having failed in the High Court and Court of Appeal, the Union appealed to the Supreme Court, raising four main issues: (i) whether the Riders fell within the scope of article 11 trade union rights; (ii) whether those rights included the right to compel an employer to collectively bargain; (iii) whether excluding the Riders from Schedule A1 violated their article 11 rights; and (iv) whether the definition of "worker" in section 296 should and could be interpreted in a way that included the Riders.

Decision

The Supreme Court dismissed the appeal on the first two issues, without needing to decide the other two. The Court agreed with the CAC that the Riders did not have an employment relationship for the purposes of article 11, based on the same reasoning, that they had a “virtually unfettered” right of substitution which (contrary to other well-known recent judgments, such as Pimlico Plumbers, CitySprint and Uber), was not limited to other Deliveroo drivers and could be exercised before or after a Rider accepted a job. It was significant that Deliveroo did not police the Riders’ use of substitutes and that the use of substitutes was not the subject of criticism or sanction. Moreover, Deliveroo did not object to the practice of substitution by a Rider for profit or to Riders working simultaneously for competitors of Deliveroo. This was inconsistent with an obligation of personal service.

The European Court of Human Rights commonly has regard to recommendations of the International Labour Organization, and in the context of an "employment relationship" has given great weight to ILO Recommendation 198 (the Recommendation). Looking at that Recommendation, the critical factors that indicated a lack of control and obligations on the part of Deliveroo included the following.

• Riders do not have to carry out any deliveries at all.
• Riders do not work within specific working hours. They operate if and when they choose.
• Their place of work is not specified or agreed. They operate where they choose within the CKT zone.
• Their activity is not of a particular duration, nor does it have a certain continuity. Riders start and stop when they choose.
• They are not required to be available.
• As regards tools, materials and machinery, all equipment is at the Riders’ expense. Riders use their own cycles and mobile phones.
• There is no periodic payment. Remuneration depends on whether Riders choose to make deliveries and how many they make.
• Deliveries are not necessarily or typically their sole or principal source of income. Even where they are, a considerable proportion may earn from Deliveroo’s direct competitors, potentially by undertaking the competitor’s work in preference.
• There is no payment in kind such as food, lodging and transport.
• There is no entitlement to weekly rest and annual holidays.
• There is no reimbursement for the cost of travel.
• There is no protection from financial risk for Riders, whether in the form of insurance, guaranteed earnings or otherwise.

Taking into account these factors, the Court concluded that the Riders were not subordinate to Deliveroo in a way that justified the protection of article 11 trade union rights.

The Court also held that, even if the Riders had such rights, they did not include the right to compel an employer to engage in collective bargaining with a trade union of their choice. The Court reviewed the case law of the European Court of Human Rights and found that article 11 did not impose such a positive obligation on the state or the employer, but only required that the state did not interfere with the voluntary establishment and conduct of trade unions. The Court also observed that the UK had a margin of appreciation to determine the appropriate level and form of collective bargaining in its legal system, and that Schedule A1 was a proportionate and reasonable way of balancing the interests of workers and employers.

Conclusion

This judgment provides helpful guidance in a long line of case law focusing on employment status in the gig economy as to the relevant factors that employers should take into account when determining whether an employment relationship exists and makes clear that only the most unfettered rights of substitution will be inconsistent with personal performance. That fundamental principle is not confined to the gig economy – organisations engaging contractors and consultants in all industry sectors should go through the determining factors in this case, and will want to ensure that their agreements address them in a commercially practicable way.