Legal experts say decision to accept delivery company’s contractual changes may complicate questions of employment status

A tribunal ruling that riders for a popular food delivery business are in practice self-employed has surprised legal experts – and has offered a potential workaround for gig economy firms looking to protect their current business models.

The Central Arbitration Committee (CAC) ruled yesterday (14 November) that Deliveroo riders are technically self-employed because they are allowed to substitute other riders to take their place on jobs.

Following an Employment Appeal Tribunal finding last week that Uber drivers are workers – and are therefore entitled to employment rights including paid holiday leave and the national minimum wage – the Deliveroo decision had been widely expected to follow the recent trend for rejection of self-employment business models.

But the committee has accepted a recent contractual change from Deliveroo, which allows drivers to substitute other riders if they are unable to make a particular shift. This appears to have helped shift the balance in favour of self-employment, as it gave riders more control over the conditions of their work in the committee’s eyes.

Aron Pope, employment partner at Fox Williams, told People Management that the case was important in the line of decisions on the gig economy, but it was fact-specific, hinging on particular contractual clauses that were pertinent to Deliveroo but did not affect most other companies in the gig economy. Previous employment cases against the likes of Uber and CitySprint, he said, had considered what happened in practice rather than the nature of contracts.

Pope said Uber and other firms would be considering how to amend their contracts and otherwise implement the ruling’s findings. The decision, he added, would “help gig economy companies implement structures that show drivers are genuinely self-employed”.

The Independent Workers Union of Great Britain (IWGB), which brought the claim against Deliveroo after it refused to recognise it as representing drivers, said the ruling demonstrated the riders’ dissatisfaction with their terms and conditions.

It said the majority of Deliveroo riders wanted workers’ rights and union recognition, which this decision would deny them.

“It seems that after a series of defeats, finally a so-called gig economy company has found a way to game the system,” IWGB general secretary Dr Jason Moyer-Lee said in a statement.

“On the basis of a new contract introduced by Deliveroo’s army of lawyers just weeks before the tribunal hearing, the CAC decided that, because a rider can have a mate do a delivery for them, Deliveroo’s low-paid workers are not entitled to basic protections.” Deliveroo said it was lobbying for changes to employment law to allow it to offer self-employed riders injury pay and sick pay.

Crowley Woodford, employment partner at Ashurst, said that in rejecting the “current judicial trend”, the CAC had found that Deliveroo riders were not entitled to union recognition. That will be “a significant blow to the unions, which are trying to expand their membership within the gig economy by challenging the basis on which such employers engage and use their labour”.

The implications are potentially widespread. Seb Maley, CEO of Qdos Contractor, said the decision showed that employment law needed to be simplified. “The boundaries between what constitutes an employee, a contractor and even a gig economy worker must be made clearer for all parties involved,” he said.

Clarity was important given the “uncertainty” surrounding IR35 rules, which were designed to fight tax avoidance by self-employed contractors, he added. While the Deliveroo decision turned on substitution, “in recent public sector IR35 reform, substitution was a huge grey area”, Maley said.

This article was originally published in People Management and Haymarket, and was written by Miriam Kenner.


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