A new decision of the UK Supreme Court (“UKSC”), delivered today, will have implications for the contractual relationship between tech platforms, gig workers and other key stakeholders ( the “Decision“). The Decision has implications, not just for food delivery platforms but for e-commerce platforms & marketplaces, mobility platforms and logistics platforms, generally. We have read and analysed the Decision. This case review is a quick highlight of the reasons (why) the UKSC reached a decision that riders on the Deliveroo platform ( the “Riders“) are not its employees.
- What Did the UKSC Decide?
The UKSC has just decided that, based on the provisions of the contract signed between Deliveroo and its Riders ( the “Rider’s Contract”), Riders are not employees and are therefore not entitled to statutory benefits conferred on employees under the Trade Union & Labour Relations (Consolidation) Act, 1992, applicable in the UK ( the “Act”).
2. Who is Involved?
The primary parties involved in this case are, (x) the Independent Workers Union of Great Britain,; (y) the Central Arbitration Committee & (z) Deliveroo.
3. What Happened?
A group of Riders joined the Independent Workers of Great Britain (the “Union”). In November 2016, the Union made a formal request to Deliveroo to recognise the Union for collective bargaining purposes in order to negotiate improved working conditions for the Riders. Deliveroo rejected this request. As provided in the Act, the Union then made a request to the Central Arbitration Committee (the “CAC“). The CAC is a quasi-judicial body which under the Act has the power to order an employer to recognise a union of employees, thereby compelling such employer to engage in collective bargaining with that union. However, the CAC can only make such orders where certain conditions exists. One of such conditions is that, the persons whom the Union seeks to represent, must be “workers” within the definition of that term under the Act. After doing a legal analysis of the Rider’s Contract, the CAC decided that the Riders were not “workers” as defined under the Act. The CAC also rejected the Union’s argument that, refusing to recognise the Union will amount to a breach of the Riders’ human rights to freedom of peaceful assembly, association with other people and freedom to join trade unions[1]. The Union then appealed to the High Court but the High Court rejected its appeal. On further appeal to it, the Court of Appeal rejected the appeal. The UKSC also unanimously dismissed the Union’s appeal.
4. What led the UKSC to reach this Decision?
Principally, the provisions in the Rider’s Contract. The UKSC determined and agree with the CAC that, based on the Rider’s Contract:
- A Rider has broad and virtually unfettered rights to appoint a substitute or replacement to take on their job. This is inconsistent with an employment relationship. In an employment relationship, an employee cannot nominate another person to perform his or her work. Deliveroo did not police a Rider’s decision to use a substitute and were not criticised or punished for appointing a substitute.
- A Rider does not have to make himself/herself available for any work at any particular time or for any particular number of deliveries. This is inconsistent with an employment relationship because, in an employment relationship, an employee cannot choose whether to work or not. An employee cannot determine the number of work hours and when to work. In an employment relationship, an employer sets how many hours an employee must work and when.
- A Rider is not prohibited from working at the same with other competitors or doing deliveries for other companies when making a delivery on behalf of a Rider. This is inconsistent with an employment relationship because, an employer will typically not allow employees to work for competing firms.
Why is this Deliveroo Decision Significant?
This decision is significant for the following reasons
- Deliveroo will not have to bear employment responsibility for its Riders. In many jurisdictions, an employment relationship is regulated by law and an employer will typically be required to provide certain benefits to employees. These may include compulsory pensions, maternity payments, redundancy payments, amongst others. A decision that Riders are employees would likely have significantly increased costs of operating Deliveroo’s business
- The Decision provides some guidance for platform owners on how to structure contractual relationships with key stakeholders who are not intended to be employees.
- Legal actions filed by riders or drivers claiming employee status are one of the most common legal actions filed against tech platform companies with a delivery/logistics service in Nigeria.
- A court may reach the same decision when presented with similar facts. However, a determination of the status of a contractual relationship and the best approach to protecting the interests of the parties thereto, requires detailed and experienced legal analysis. The Decision highlights the need for platforms who are keen on preserving their business and revenue model to engage experienced technology & commercial lawyers, for this purpose.
What Policy Questions are raised by the Decision?
The Decision raises a key policy question as to whether or not, employment law & policy should formally recognise a distinct class of workers that are neither employees nor independent contractors, as it would appear that the traditional distinctions between employees and independent contractors, may not give adequate consideration to the realities presented by the gig economy.
The foregoing case summary is not legal advice and only provided for informational purposes only. Each case is different. Please seek legal advice peculiar to your situation. For further consultations or clarifications, please reach out to your usual Balogun Harold contact or send us an email via support@balogunharold.com
[1] Article 11 of the European Convention on Human Rights
