Contractors, the contract is still king, as Deliveroo’s Supreme Court victory proves

As it’s not an IR35 case contractors might not have noticed it but last week, with nods to the importance of substitution, the UK’s Supreme Court unanimously ruled that Deliveroo riders were not ‘workers,’ but were ‘self-employed.’  

You’d be forgiven for thinking that this represents good news for the Deliveroo riders, but it’s not, instead it’s good news for Deliveroo, writes Rebecca Seeley Harris of ReLegal Consulting.

The whole point of this case was that many of the riders had joined the Independent Workers Union of Great Britain, solely so Deliveroo would formally recognise the union for collective bargaining purposes.

A fight for union recognition

As the riders didn’t have the employment status of either worker or employee, Deliveroo did not have to recognise the union so, the IWUGB took the case to the Central Arbitration Committee (CAC).

Having analysed the nature of the relationship between the workers and Deliveroo, the CAC decided that the riders were not workers and all the courts, including the High Court and the Supreme Court, have now agreed.

What will interest a wider audience, including contractors, is the evidence that the Supreme Court used in coming to the conclusion that there was no employment relationship between Deliveroo and the riders.

Human rights

It is important first of all to point out that this case was concerning the application of Article 11 of the European Convention on Human Rights which protects the general rights of freedom of peaceful assembly and freedom of association with others.

These rights are, however, dependent on there being an employment relationship.

The Deliveroo-rider relationship

To establish whether there is or is not an employment relationship, the court had to look at the substance of the relationship between the riders and Deliveroo.

It examined in detail how the new contract between Deliveroo and the riders operated, in practice. And it applied close scrutiny as to whether the provisions in that contract genuinely reflected the true relationship between the parties.

Unfettered substitution

Some findings of the CAC were particularly significant.

First, the contract between the riders and Deliveroo gives riders a broad and virtually unfettered right to appoint a substitute to take on their jobs.

Following on from this, the substitute delivered the job as if they were the original rider. The contract was very specific about the provision of a substitute and this right was followed through in practice.

Deliveroo stated in Clause 8 of the riders’ contract: “All acts and omissions of the substitute shall be treated as though those acts and/or omissions were your own.

“You shall be wholly responsible for the payment to or remuneration of any substitute at such rate and under such terms as you may agree with that substitute”.

In business…

Furthermore, the riders were not required to wear branded uniform and could work for a competitor simultaneously.

The riders had to provide all their own equipment including a phone and a vehicle used for delivery, and they were responsible for obtaining third-party liability insurance.

This insurance was also meant to cover any substitute that they supplied.

Re-drafted contracts

All the above points were taken from Deliveroo’s new contract. This contract had been re-drafted specifically to ensure that Deliveroo did not have the control to prove an employment relationship for the purposes of this court action -- and it worked.

In addition, this contract could be terminated at any time; for any reason.

The CAC also made findings concerning how the parties conducted themselves in practice. Was the new contract all in order to prove a point to the court, or did it reflect reality?

Substitution in practice

The CAC found that, in reality, substitution was rare. The reason for this was that Deliveroo made it easy to work or not work, as there was no obligation to provide or accept work.

Indeed this was a query for the CAC that Deliveroo had a substitution policy, bearing in mind that it would rarely be used but, on some occasions, a substitute had been used -- in one case where the rider had even made a profit on the substitute!

Deliveroo made it easy. They didn’t object to the workers actually being independent and flexible in practice, and this is something that the Supreme Court agreed with.

The contract is king

Not for the first time, it is the case here that a well-drafted contract has won the day.

Deliveroo had the contract re-drafted specifically and the court did not object to the re-drafting being for the purpose of defeating the court action. It was clear in practice that Deliveroo acted in accordance with the terms of the contract.

The food courier company did not impose controls on the riders and there was a true right to substitute.

Implications for a contractor-IR35 setting?

In providing guidance to clients on how to draft their contracts to be so called ‘IR35 friendly’, I always advise that whatever the contract says has to be reflected in how they act, in practice. This is often the sticking point. Giving up control, in reality, is much harder than it seems. It is, however, very necessary to prove that relinquishing of control if the workers are to emerge as truly independent.

Tuesday 28th Nov 2023
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Written by Rebecca Seeley Harris

Rebecca is a leading expert in employment status, IR35 and the law involving independent contractors and the self-employed for the purposes of tax and employment law. Rebecca has run her own consultancy for the past 20 years covering all employment status issues such as off-payroll in the private and public sector, otherwise known as IR35, s.44 and any issues affecting the self-employed and personal service companies.
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