Deliveroo riders and their union lose legal claim

16th November 2017

Deliveroo riders and their union lose legal claim

In 2016, the IWGB trade union applied to the Central Arbitration Committee (CAC) to be recognised for collective bargaining by Deliveroo. The application related to a bargaining unit comprising some of Deliveroo’s delivery riders in the Camden area of London.

The status of the riders made this an unusual application: were they independent contractors or ‘workers’? If the former, the application would be rejected by the CAC as trade union recognition is not available to genuinely self-employed contractors. The application was therefore seen by some as an indirect way to establishing ‘worker’ status for Deliveroo riders and, thereby, winning them worker rights including minimum wage, paid holiday and pension entitlements.

The CAC has decided that the riders are independent contractors, not workers, and the union’s application fails. This goes against recent gig economy worker status decisions and illustrates how a business, such as Deliveroo, may organise themselves to defeat such legal claims.
 

The CAC’s decision: the right to substitute is genuine

Deliveroo did not accept that any of the riders within the proposed bargaining unit was a ‘worker’. The trade union legislation applying to this case involves a slightly different definition of ‘worker’ status from that considered in the recent Uber and similar cases. However, on the facts, the difference did not need to be examined in detail by the CAC as the union failed at the first hurdle.

Here, a ‘worker’ must enter into a contract to work personally for another party who is not his/her professional client. The central issue between the parties was whether, under the contract, the riders undertake to perform work personally for Deliveroo.

Deliveroo introduced a new contract before the CAC hearing which allowed riders to appoint another person to make the delivery on their behalf without seeking the company’s approval (a substitution clause).

The CAC found that the new contract involved less control and direction by Deliveroo than it had exercised under the old contract. In practice, it found that substitution is rare but it does happen. Having found the substitution clause to be genuine, the CAC decided the union’s application must fail as it could not be said that the riders undertake to do personally any work for Deliveroo and therefore they did not fall within the required definition of “workers”.

Read the decision

 
 Comment

On the facts of this case, Deliveroo’s genuine substitution clause defeated a worker status claim in the gig economy. This will be of interest to other employers with worker status risks in their own contractor workforces.

However, it should be noted that the substitution clause, and the associated lessening of control over workers that is required to make it work in practice, comes with potential disadvantages. For example, in this case, the CAC noted: “By allowing an almost unfettered right of substitution, Deliveroo loses visibility, and therefore assurance over who is delivering services in its name, thereby creating a reputational risk, and potentially a regulatory risk, but that is a matter for them.”

Finally, the CAC’s decision does not create a precedent and each case will continue to be decided on the facts.

 
 
For more information please contact Diane Gilhooley.

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