No Entitlement to ‘Worker’ Rights When There Is a Power of Substitution, UK Supreme Court Rules

Quick Hits

• The Supreme Court of the United Kingdom ruled that app-based delivery riders who can designate substitute riders are independent contractors and therefore do not have “worker status,” with the implication that they do not qualify for certain rights and entitlements (including paid holidays).
• The decision impacts the rights of a large number of organisations and people contracted within the gig economy.

In Independent Workers Union of Great Britain v Central Arbitration Committee, the Supreme Court of the United Kingdom confirmed that individuals who can supply substitutes to work in their place cannot be classified as employees or workers. The Supreme Court found that UK Deliveroo riders were self-employed independent contractors who could not be legally classified as “workers” under the definition found in the Trade Union and Labour Relations (Consolidation) Act 1992.

Background

Since 2017, the Independent Workers Union of Great Britain (IWGB) has undergone legal battles to classify Deliveroo riders as “workers,” giving them the ability to form a union and engage in collective bargaining to improve their working terms and conditions. However, the IWGB’s application was rejected before the Central Arbitration Committee, which, among other things, adjudicates issues regarding the recognition of trade unions for the purposes of collective bargaining in the workplace. The IWGB then took its case before both the High Court and the Court of Appeal, but ultimately the appeals were dismissed. The riders could not be found to be “workers” in legal terms, as they worked for Deliveroo under “supplier agreements,” which ultimately accommodate a very flexible working model. Factors such as the ability to work simultaneously for the company’s competitors and not being required to work specific hours or be available for a certain percentage of orders led the court to reach its decision.

The IWGB appealed the Court of Appeal’s decision to the Supreme Court.

The Supreme Court’s Ruling

The Supreme Court held that Deliveroo riders were not “workers” under the Trade Union and Labour Relations (Consolidation) Act 1992. Among the key justifications stated for the Supreme Court’s judgment was the unlimited ability of riders to allow substitutes to perform deliveries on their behalf without Deliveroo’s direct involvement. The duty to deliver personal service is fundamental to being a worker or an employee, and there must be a contract wherein one person agrees to work for another. If that component is absent, such as in the case of substitution, then employment or worker rights do not apply.

This principle is consistent with an earlier Court of Appeal decision, Express and Echo Publications Ltd v. Tanton. Since that ruling was handed down in 1999, it has not been unusual for businesses to include a substitution clause in their contracts, permitting an individual to assign a task to another person. However, a substitution clause may be effective only if it is found to be genuine. For example, in Autoclenz Ltd v Belcher and others the Supreme Court found that the right to substitution included within the contracts of car valeters was not an accurate reflection of their working relationship. In reality, the valeters were not able to provide substitutes. In Autoclenz, the Supreme Court found that the right of substitution in the written contract was a “sham” to try to avoid worker rights. This resulted in valeters being considered “workers.”

In Deliveroo riders’ contracts, on the other hand, it was explicitly stated that riders might give other adults permission to carry out their orders; this did not require approval, nor did it require Deliveroo to assess the alternatives’ appropriateness for the roles. Although riders themselves might be assessed and evaluated, Deliveroo did not exert control over the persons designated to be substitutes.

Key Takeaways

It is clear that this is a complex debate, but it remains that the right of substitution, alongside genuine evidence in practice, places a significant hurdle for those trying to secure employee status or worker rights.

Ogletree Deakins’ London office will continue to monitor developments and will provide updates on the Cross-Border and Global Reorganisations blogs.

Roger James is a partner in the London office of Ogletree Deakins.

Lorraine Matthews is a data protection and cybersecurity practice assistant in the London office of Ogletree Deakins.

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