A Working Contradiction?
2021 has been a busy year in the courts for the platform economy with two seemingly contradictory rulings in the Uber case (Feb 2021) and the Deliveroo case (Jun 2021). Central to both cases was whether or not the people engaged were genuinely self-employed, or “workers” which has a big impact on employment rights (self-employed have no employment rights).
For a bit of background on the uber case, what it means to be a worker and the case’s potential implications, I wrote a 3-part blog
To the layperson, and average app user (who doesn’t have Uber and Deliveroo installed on their phones (especially after a year in lockdown) they may seem very similar, with similar services (one taxies you somewhere, the other taxies food to you). So shouldn’t the drivers end up legally with the same employment status?
Although both judgements on the face of it appear to contradict each other, the decision made in each were based on different aspects of the legal test for a workers’ status, which when both are put side by side and analysed may pave the way for an easy-to-understand simple mechanism to determine a workers status, rather than some of the overly complex tools that are out there.
Whereas the Uber case was determined by key features such drivers not being able to determine the fares, Uber’s monitoring of acceptance and cancellation rates, the crux of Independent Workers’ Union of Great Britain (IWGB) argument hinged on being able to show that Deliveroo drivers and riders were required to personally make the delivery and could not send a substitute instead.
The Court of Appeal ruled in favour of Deliveroo stating that the riders are under no obligation to provide their services personally; effectively having an unlimited right of substitution.
A new version of the Supplier’s Agreement which Deliveroo use was pushed out to its riders just weeks before the initial court hearing in 2017, which effectively gave enough scope for them to still be considered self-employed. The Court of Appeal did however note that “it is reasonable to infer that Deliveroo’s reason for making the change was to strengthen its position in the context of IWGB’s claim for recognition.”
The earlier Supplier’s Agreement “involved much more control and direction by Deliveroo –strict uniform requirements, a different attitude to substitutes and in other significant respects.”
This attitude change in terms of riders being able to subcontract the deliveries is what clinched the case for Deliveroo whose spokesperson said, “Deliveroo’s model offers the genuine flexibility that is only compatible with self-employment, providing riders with the work they tell us they value.”
Whilst each engagement of the self-employed clearly need to be assessed on their own merits, businesses wishing to be certain that they are self-employed and don’t fall into the worker category should ensure that they have a clear and genuine right to send a substitute to carry out the work (whether or not this is taken up is irrelevant). If this right to send a substitute exists, then they are self-employed and in a massive oversimplification can almost be used as the only measure.
Whilst on the face of it we may see the classification of workers being simplified, it may not last and the disputes in the gig economy won’t be going anywhere. The Netherlands courts ruled for instance, that Deliveroo’s riders are indeed employees and the European Commission will release recommendations on potential gig-economy legislation later this year.
HMRC’s CEST tool places a heavy weighting on the right to substitute to be outside IR35 BUT also that this must be a practical right. The judges in the Deliveroo case said the simple “right to substitute” is sufficient in a contract as evidence of self-employment. The ramifications could be enormous, and leaves businesses with plenty of food for thought (obviously ordered via Deliveroo).
author: Matt Jennings, Client Solution Manager at My Digital