“The Simple Things You See Are All Complicated”*: thoughts on Deliveroo – by Gwyneth Pitt

*Title from “Substitute”, The Who: The Who – Substitute (youtube.com)

Image by 6581245 from Pixabay

1. Introduction

The Clapham omnibus passes perilously close to a cyclist toiling along with a big turquoise box on his back.  The passengers see the kangaroo logo, and when the  conductor asks, “Who is he working for?” they chorus as one: “Deliveroo!”  Simple.  Except no, it turns out that the legal position is more complicated than that.

In November 2023 the Supreme Court held that Deliveroo delivery riders are not “workers” in an employment relationship with the company, meaning that they have to be regarded as self-employed. Thus they are not entitled to rights under Article 11 of the European Convention on Human Rights (ECHR)  to join and be represented in collective bargaining by their union.  

This article is concerned with the employment status aspects of that decision.  It argues for a reappraisal of the indicia of employee and worker status on the basis that traditional approaches have failed to keep pace with evolving business models.

2. History

Seven years ago, in November 2016, the IWGB sought recognition from Deliveroo for the purposes of collective bargaining in respect of Deliveroo riders working in the Camden and Kentish Town districts of London.  When the company rejected the approach, the union applied to the CAC to set in motion the statutory recognition procedure under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) Sched A1.  However, a union can only apply for recognition in respect of groups of workers, and the term “worker” is defined in TULRCA s.296 as someone with (a) a contract of employment, or (b) “any other contract … to do or perform personally any work or services for another party who is not a professional client of his”.  The issue in this case, as in so many others involving people working in the gig economy, was the scope of the so-called “limb (b)” definition, to be found in similar terms in the Employment Rights Act 1996 s.230(3), the Equality Act 2010 s.83(2), the Working Time Regulations 1998 reg.2 and the National Minimum Wage Act 1998 s.54.  Employment in such industries is characterised by a high degree of autonomy for these workers in relation to when and for how long they do the work coupled with a high degree of insecurity as to the availability of work and generally low wages.  Work frequently, but not invariably, becomes available via an online platform, hence the EU prefers to use the term platform workers in its attempt to regulate for minimum standards.

Contracts for gig workers are invariably in a standard form drawn up by the employing company with no opportunity for variation through negotiation, and the Deliveroo contract was no exception.  It described itself as a Supplier Agreement, according to which riders would render services as a “supplier in business on your own account”, and contained a clause negativing mutual obligation, i.e., the company had no obligation to offer work, and the riders could choose whether or not to log on to the app to make themselves available to work without restriction.  Even when logged on, they were under no obligation to accept any job that was offered.  They were paid a fee per delivery (usually £3.75 per job), with the prices set by Deliveroo.

So far, the Deliveroo standard form contract is substantially similar to other platform work contracts.  The major difference, and the one on which the union’s case foundered at every level in the legal process, was that Deliveroo gave the riders carte blanche to use any substitute they wanted, at any time, to do the work in their place.  They did not need to seek permission in advance, and the only limitations were (a) that they should not use anyone who had had an agreement with Deliveroo terminated for breach; (b) that they should inform Deliveroo if the substitute used a different kind of vehicle from the contracted rider, and (c) that the originally contracted rider remained responsible in every way for the substitute’s performance.  This term was introduced, along with other changes to the contract which had the effect of diluting Deliveroo’s control over the riders, shortly before the original CAC hearing, but it was accepted that the changes were valid, even if introduced solely to defeat the riders’ claim (see [2023] UKSC 43 para 23).

Although the substitution clause was in a sense completely unnecessary, since a rider unwilling to act personally needed only to log off the app, the CAC found that it was not a sham clause (In the sense identified in Autoclenz v Belcher [2011] UKSC 41) because there was evidence of riders actually using substitutes.  This was “the central and insuperable difficulty for the union” as the CAC commented.  While a limited right of substitution was held by the Supreme Court not to be inconsistent with a contract to render personal service in Pimlico Plumbers Ltd v Smith [2018] UKSC 29, the virtually unfettered and unpoliced right to substitute in the Deliveroo supplier agreement was found at every level to be inconsistent with an obligation to render personal service.  The CAC therefore held that the delivery riders were not “workers” within the meaning of TULRCA s.296 and therefore the union could not invoke the recognition procedure under TULRCA Sched A1 in respect of them.  Furthermore, the CAC considered that ECHR article 11, guaranteeing the right to form and join trade unions, made no difference to this.  The union sought judicial review of the CAC decision on several grounds, but was allowed to proceed only on the Article 11 issue.

3. International norms

The appeal to the Supreme Court, therefore, was purely on whether the Deliveroo riders had the right to form and join trade unions under ECHR Article 11.  Four important points emerged from the Court’s review of the jurisprudence of the European Court of Human Rights (ECtHR), in particular that Court’s decision in The Good Shepherd.  First, the right to form and join trade unions, as a sub-set of the right to freedom of association, is confined to people who are in an employment relationship.  Secondly, the concept of an employment relationship for the purpose of ECHR Article 11 is autonomous, specific to the Convention and applies to all its member states regardless of domestic law.  Thirdly, regard should be had to the criteria identified by ILO Recommendation 198 on the Employment Relationship (2006) in deciding whether there is an employment relationship. And fourthly, national authorities need to be alert to the possibilities of abuse of legal forms to disguise the reality of an employment relationship and to ensure that workers’ protection is not undermined by such manipulation.

The reference to ILO Recommendation 198 is a positive step, since its mainspring is the need to ensure that workers are not deprived of their employment rights.  As its Preamble states: “situations exist where contractual arrangements can have the effect of depriving workers of the protection they are due”.  Paragraph 13 of the Recommendation suggests that member states should define specific indicators of an employment relationship and goes on to suggest 14 relevant factors.  The list contains no surprises: control, integration and personal service are all there, along with provision of tools and equipment by the employer and the absence of financial risk to the worker.  It may be surprising that a Recommendation drawn up in 2006 should take little account of newer patterns of working: in its terms, it could as well have been drafted a generation earlier.  However, the emphasis on focusing on the substance of the relationship rather than just its legal form is welcome.  As the Supreme Court noted, this is also mandated by domestic law (Autoclenz v Belcher [2011] UKSC 41 para 29) and EU law (Bridges v Yodel Delivery Network Ltd Case C-692/19 para 30).

Since the ECtHR expressly adopted the ILO criteria in The Good Shepherd, they are clearly incorporated into the test of an employment relationship for the purposes of ECHR Article 11, as the Supreme Court recognised ([2023] UKSC 43 para 61). However, like the Court of Appeal, the Supreme Court adopted an unduly broad brush approach in concluding that the multifactorial approach advocated by Recommendation 198 “broadly parallels” (para 60) the approach of domestic law.  Having stated that, “The correct approach requires the application of a multifactorial test, focusing on the practicalities of the relationship and how it operates in reality” (para 61) the Supreme Court actually goes on to give absolute primacy to the personal service requirement which it holds to be defeated by contractual provision for a nearly limitless substitution right, rather than weighing it as one factor among the many suggested in Recommendation 198.

It is true that domestic legislation focuses on personal service in defining both who is an employee as well as who is a limb (b) worker, but it is at least arguable that in considering whether an employment relationship existed for the purposes of ECHR Article 11 there was scope for a different approach to be taken.  Before considering what that approach might look like, let us consider the personal service requirement a little further, anticipating the objection that personal service has to be the crucial distinguishing feature of an employment relationship.

The main reason for arguing that this is not the case is that, although personal service was famously stated to be one of three conditions of a contract of employment by MacKenna J in Ready Mixed Concrete (South East) Ltd v MPNI [1968] 2 QB 497, even he considered that a limited or occasional power of delegation would not be inconsistent with such a contract (citing Atiyah’s 1967 Vicarious Liability in the Law of Torts as authority).  A right to substitute has been held to be consistent with worker status where it applied only if the worker was unable (as opposed to unwilling) to work (James v Redcat (Brands) Ltd [2007] ICR 1006), and where the worker could substitute another worker who also worked for the same employer (Pimlico Plumbers Ltd v Smith [2018] UKSC 29).  As a matter of logic, once it is admitted that some delegation or substitution is not inconsistent with a limb (b) worker contract (or, for that matter, a contract of employment), it should follow that the possibility of substitution of any kind cannot be a complete answer to whether or not such a contract exists.  It is not a prior defining characteristic.  Furthermore, the Supreme Court’s decision focuses on the contractual provision for substitution rather than looking closely at the practicalities or reality of the situation.  There seems to be no reason in principle why it should not be possible for a court or tribunal to look at how substitution actually works in practice, and on that basis to decide whether it is extensive enough to weigh in the balance (alongside other indicators) against finding an employment relationship.

It may also be noted that it is an equivocal test, in that it is perfectly possible to envisage situations where a worker is clearly self-employed, yet his or her personal service is regarded as essential to the contract.  Commissioning a portrait painter is an obvious example, but it might well extend also to a trusted plumber or electrician.

4. A business reality approach

A drawback of ILO Recommendation 198 is that it focuses principally on the worker in the relationship.  This is apparent also in the EU’s proposed Platform Work Directive (COM (2021) 762).  This can lead to relevant facts being either completely overlooked or at least substantially under-appreciated.  What is needed is a wider holistic approach that takes account of the dimension currently missing: the nature of the business, the business model and how the business represents itself through its branding and marketing. 

This is not a new idea: in Montreal v Montreal Locomotive Works Ltd [1946] UKPC 44 Lord Wright, in the Privy Council, said “…it is in some cases possible to decide the issue by raising as the crucial question whose business is it”, and in USA v Silk (1946) 331 US 704 the American Supreme Court proposed an “economic reality” test.  Both cases were cited in support of his judgment by Cooke J in Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173, but that broad analytical approach has gotten somewhat lost in recent years.

Deliveroo describes itself on its website as

…a hyperlocal three-sided marketplace, connecting local consumers, restaurants and grocers, and riders to fulfill [sic] a mission critical, emotional purchase in under 30 minutes. By offering fast and reliable delivery which consumers can track online, Deliveroo has grown rapidly.

It is an online platform-based company which makes food deliveries, with some 50,000 people making those deliveries, and it obviously could not exist without those people.   It is quite unlike a company seeking customers for its goods via a web platform or any enterprise which needs a delivery service for its goods.  Its business is delivering food and the business model cannot work without riders making those deliveries.  But yet it employs none of these people?  How realistic is that? 

In terms of branding and marketing, the brand is clearly Deliveroo and the service marketed – speedy food delivery – stands or falls according to the Deliveroo reputation. Customers order via the Deliveroo website and expect a Deliveroo delivery.  They would undoubtedly be very surprised to hear that they were dealing with a third-party entrepreneur.

Finally, consider the nature of the contract between the parties.  It is invariably (and not just in this case) a standard form contract drawn up by the employing party with no opportunity for negotiation or variation by the party who does the work.  That again should be a clear indicator of a hierarchical relationship in which the worker is fairly obviously subordinate to the employer.

Surely any tribunal or court asking itself the question – whose business is this? – could only come up with one answer: that the business is Deliveroo’s and the riders are working for that business.

5. Consequences

Consider the following scenarios:

1. Deliveroo terminates its services agreement with X and Y, identified as the leaders of the movement to get riders to join the union, stating expressly that this is the reason for their termination.
2. Deliveroo writes to all the other riders in Camden and Kentish Town, warning them that they will get the same treatment if they encourage union activity.
3. Deliveroo decides to discriminate in future against trade union members when offering services agreements.

If the riders are not “workers” then it would appear that Deliveroo would have no liability in these situations.  Such results would seem extraordinary, and there must be some question as to whether the ECtHR would hold that there was no breach of ECHR Article 11 if presented with the issue in these terms.  But for the time being, this is apparently the position of English law.

6. Conclusions

This note makes no apology for approaching the Supreme Court’s decision in Independent Workers Union of Great Britain v CAC and Roofoods Ltd, t/a Deliveroo from the standpoint that the outcome must be wrong.  The question posed in the first paragraph not only seems to have a simple answer, it is argued that the simple answer would have been the right one.  

Some may feel that the Deliveroo decision is less than cataclysmic, since very few enterprises would be prepared to allow such an unfettered right of substitution as that set out by Deliveroo.  However, it is devastating for the 50,000 plus people working for Deliveroo in the UK, and if this company has found the benefits of avoiding responsibility as an employer to outweigh the risks, it could well be that it will become the model for the proliferating private delivery industry.

Most damagingly, it shows a simple method by which to undermine employment protection rights and, it is submitted, a method against which neither the provisions of ILO Recommendation 198 nor yet the EU proposed Platform Work Directive would necessarily be proof.

As noted already, the issue in the Supreme Court was purely on whether the Deliveroo workers could invoke ECHR Article 11.  However, the reason that they were not allowed to appeal on the domestic law point was because it was regarded as beyond argument that they would lose.  It may be noted, however, that since the CAC made its initial decision in 2016, and since the union’s appeal was only allowed on the Article 11 point in 2018, a differently constituted Supreme Court has delivered its ground-breaking decision in Uber BV v Aslam emphasising the importance of a purposive approach to interpreting legislation designed to protect vulnerable workers.  Had the timing been better, and a purposive approach accepted, it is conceivable that the result in the Deliveroo case might have been different.  Conceivable, but by no means definite.  The doctrine that personal service is a sine qua non for a contract of employment, or for a “limb (b)” worker’s contract, has achieved such a stranglehold in the case law of this century that it would seem that the only possible solution would be via legislation. 

It will be remembered that the Taylor Review recommended codification of the factors for judging employment status back in 2017.  Such an approach is not without the risk of causing yet more litigation, although this could be minimised by providing that the question is one of fact for the initial tribunal, provided it has directed itself correctly.  However, the factors would need to be chosen with care.  They should include a clear statement that the existence of a substitution clause does not of itself preclude the finding of a contract for personal service and that the actual practice of the parties in relation to substitution should be taken into account.  The fact that terms are imposed via a standard form contract without negotiation should also be regarded as a relevant factor, and consideration of the business model should also be enjoined.  Such reforms might go some way to reducing the current levels of complication and produce an outcome more in line with common sense and justice.

About the author

(Suggested citation: G Pitt, ‘”The Simple Things You See Are All Complicated”*: thoughts on Deliveroo’ UK Labour Law Blog, 15 January 2024 available at https://uklabourlawblog.com/)