Deliveroo riders dealt blow in long-running employment status case

Employment status, Tax

Court upholds verdict that riders cannot be classed as workers and receive rights 

Deliveroo riders challenging to have their employment status changed have been dealt another blow after the Court of Appeal upheld a previous decision that ruled them self-employed – a result which means they cannot claim workers’ rights. 

Above all else, this case shines a light on the confusing nature of employment law, emphasising the importance of making well-informed collaborative decisions regarding the employment status of self-employed individuals. 

The Independent Workers’ Union of Great Britain (IWGB) first opened legal proceedings in 2017, representing a number of Deliveroo riders who want their employment status changed from self-employed to worker, as they look to unionise and secure employment rights.

Following the high profile Supreme Court ruling in February that saw Uber drivers win their battle for employment rights, the Deliveroo judgement is the latest in a long line of employment status cases. 

However, unlike the Uber case, which was originally touted as a potentially landmark ruling, the Deliveroo verdict favoured the engager, not the individual – but why is this? 

In this article, we explore the case details and highlight the major takeaways for businesses engaging self-employed people. 

 

Substitution proves key 

The right of substitution was critical to the outcome of the Deliveroo case. 

Riders are able to provide a substitute to deliver the services in the event they can’t or don’t want to perform it themselves. 

When it comes to employment status decisions, being able to sub in another competent individual can be important – albeit not necessarily decisive – in showing that a person’s contract doesn’t reflect employment. 

The thinking here is that it shouldn’t matter who carries out the work if the services are delivered by a genuine business or self-employed worker. In contrast, employees can’t simply send in someone else to do their job. 

Uber drivers aren’t able to provide a substitute either, which paints a picture of employment – or at least in their case, worker status. 

Deliveroo riders, on the other hand, can, which was key in the Court of Appeal upholding their self-employed status. 

That’s not to say substitution is the only factor that should be taken into account when deciding if someone is self-employed, a worker or an employee. From Control to Mutuality of Obligation (MoO), every aspect of a contract should be considered. 

 

Deliveroo and IWGB make differences known 

Commenting on the case, a Deliveroo spokesperson said the latest result “marks an important milestone”, with UK courts having now “tested and upheld the self-employed status of Deliveroo riders four times.”

They added: “Deliveroo’s model offers the genuine flexibility that is only compatible with self-employment, providing riders with the work they tell us they value.

“Those campaigning to remove riders’ flexibility do not speak for the vast majority of riders and seek to impose a way of working that riders do not want.”

In response, IWGB’s president, Alex Marshall, told Sky News that “Deliveroo couriers have been working on the frontline of the pandemic and whilst being applauded by the public and even declared heroes by their employer, they have been working under increasingly unfair and unsafe working conditions.”

“The reward they have received for their Herculean effort? Deliveroo continuing to invest thousands of pounds in litigation to silence workers’ voices and deny them the opportunity to negotiate better terms and conditions.”

 

Case offers food for thought

There are lessons that other businesses engaging self-employed workers can learn from this judgement. 

While in this scenario Deliveroo won, this isn’t always the case. Uber and Addison Lee’s recent high profile defeats are just two examples of how costly employment status disagreements can become – and not just financially, but reputationally too. 

Setting significant legal fees aside, reports show that Deliveroo’s share price rose 9% upon the verdict. But what might have happened if riders had overturned the verdict and handed the gig economy giant a defeat? 

The tax liability risk associated with incorrect employment status decisions must never be ruled out either. If a business engages a self-employed individual whose status reflects employment, the company becomes liable for any missing tax that should have been paid to HMRC for the length of the contract.

These potential threats can be managed, though. And as our CEO, Seb Maley, explained to Computer Weekly, along with exposing the “confusing nature of employment law”, this case “proves that making well-informed employment status decisions that all parties agree to from day one is vital.”

For more on employment status and why it’s crucial that self-employed workers are engaged compliantly, please click here.

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