17 Nov 2017

Uber and Deliveroo – Different answers to the same question

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Last week, the Employment Appeal Tribunal ("EAT") held that most Uber drivers are "workers", and are therefore entitled to holiday pay and sick pay as well as some other employment rights such as whistleblower protection. While this week, the Central Arbitration Committee ("CAC") has found that riders who deliver food for Deliveroo are not "workers" – and will not, therefore, benefit from those rights.

In a world where the legal system has been accused of trying to thwart the "freedom" and "flexibility" of the "gig economy", these two different answers to essentially the same question have caused further confusion and uncertainty. So what are the key differences between the two cases – and what should businesses be doing to protect themselves?

Uber

In the Uber case the EAT looked beyond the tightly drafted documentation at the reality of the situation. It concluded that Uber drivers were not genuinely self-employed. The key factors were that they had to provide the service personally and that once the drivers were logged into the Uber app, they were essentially obliged to accept any work that was offered to them (or at least, could not refuse it without suffering penalties).

The case is a good example of what we already knew – robust documentation is useful but not sufficient. Tribunals will always look beyond the documentation at the reality on the ground. Similar analysis was applied in the City Sprint and Excel cases in the Employment Tribunal earlier this year.

Deliveroo

The Deliveroo case was not brought by the individual riders but by the Independent Worker's Union of Great Britain ("IWGB") on their behalf. They sought union recognition for the riders which meant that, under trade union legislation, the CAC had to decide whether the riders were workers for the purposes of employment legislation.

The key point for the CAC was that the rider contract contained a right to use a substitute rider to carry out an order – and that right was genuinely used without objection from Deliveroo. The IWGB pointed out that this was a strange thing for Deliveroo to agree to and that it would have a potential impact on customer satisfaction. The CAC said that such commercial considerations were Deliveroo's business, and any impact on their business was for them to navigate. They came to the conclusion that, even if Deliveroo had included the clause simply to defeat this type of claim, it still worked to do just that, provided that the right of substitution was genuine.

What next?

It's worth bearing in mind that the CAC decision is not binding on Employment Tribunals or other courts. It remains open for Deliveroo riders (individually or collectively) to bring a claim for worker status in a Tribunal, where a different approach may be taken.

Tempting as it may be for other businesses to introduce substitution clauses to their contracts in order to avoid worker status (as City Sprint are also reported to have done), it is not something that should be done without proper thought. Firstly, simply including the clause will not be sufficient to defeat a claim of worker status if it is not a genuine right and is never relied on in practice. Secondly, any business considering such a change will need to be sure that it works within the particular business model. Customers might not care too much who delivers their dinner, but they are likely to care much more about who comes into their home to carry out plumbing work or who drives them home at night.

What should you be doing

The issue of worker status is not only relevant for "gig economy" businesses like Uber and Deliveroo – it has far wider implications, for all businesses that use consultants and contractors. In light of the recent decisions, businesses should review their contractual arrangements and look carefully at how they engage contractors.

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