The gig economy has an uncanny ability to defer its moment of crisis.
Deliveroo on Tuesday won a case in the UK Supreme Court that leaves its workers riders unable to access the main collective bargaining statute, and did so thanks to a contract clause that simultaneously expands the company’s available labour pool.
In the UK, a “worker” in an employment relationship is someone who works . . .
(a) under a contract of employment, or
(b) under any other contract whereby he undertakes to do or perform personally any work or services for another party to the contract who is not a professional client of his, or
(c) in employment under or for the purposes of a government department (otherwise than as a member of the naval, military or air forces of the Crown) in so far as such employment does not fall within paragraph (a) or (b) above.
The Independent Workers Union of Great Britain argued in 2016 that Deliveroo riders (who are paid per delivery and on applying to ride receive “supplier agreements” offered on a take-it-or-leave-it basis) work for the company under contracts of the kind specified under section (b).
The Central Arbitration Committee disagreed. So the IWGB filed for a judicial review in the High Court, which ruled against them. The IWGB took the case to the Court of Appeal, where it lost again. Tuesday’s Supreme Court decision looks like the end of the road, at least as far as the national courts are concerned.
From MainFT:
In a unanimous judgment on Tuesday, five judges said the contracts between riders and the company did not constitute an “employment relationship” because riders were able to use another person to cover their deliveries without Deliveroo’s involvement.
“Riders are thus free to reject offers of work, to make themselves unavailable and to undertake work for competitors,” it said. “Once again, these features are fundamentally inconsistent with any notion of an employment relationship.”
One factor in Deliveroo’s favour was that its riders can “substitute” in another person to work shifts on their behalf. Substitution is a legal right of self-employment and clauses that formalise the practice have become increasingly standard among gig economy operators, raising fears that they could offer a way to avoid a finding of employment status under section (b) above.
Deliveroo strongly rejects the claim that it has sought to avoid statutory obligations. A Deliveroo spokesperson said: “UK courts have cited a range of factors to support multiple judgements that Deliveroo riders are self-employed, for example the fact that riders never have an obligation to work and can choose for themselves what work to perform.”
The Supreme Court case centred on article 11 of the European Convention on Human Rights, which covers a person’s right to join trade unions. Deliveroo classifying its riders as self-employed amounts to a refusal to recognise a union for collective bargaining, the IWGB argued. The court ruled that for Article 11 to apply to the claimants, they needed to be in an employment relationship with Deliveroo.
Alan Bogg, a professor of labour law at the University of Bristol, said the ruling had only raised more questions.
“What’s controversial about [the] judgment is that the Supreme Court concluded that even applying the European Convention’s wider test, the Deliveroo riders were not in an employment relationship,” he said. “And that, I think, is a real difficulty in terms of whether that’s a correct interpretation and application of that test as it’s been elaborated by the European Court.”
The effect of the judgment “is to legitimise an employment model that has allowed disreputable practices to fester,” Bogg said. Indeed, the BBC reported the following just last week:
A black-market trade in delivery app accounts allows underage teenagers to sign up as riders, the BBC has found.
The family of a 17-year-old who died while working as a Deliveroo rider – despite 18 being the minimum age – say the company is “unaccountable”.
The Home Office is urging Deliveroo, Just Eat and Uber Eats to reform policies that let riders lend accounts to others, known as “substitution” . . .
It is the duty of the original account holder – not the app they work for – to check that their “substitute” meets the legal criteria to work.
Bogg said Deliveroo had inserted substitution clauses into riders contracts “very shortly” before the Central Arbitration Committee hearing in 2016. “The timing of their inclusion in the written contracts would lead a reasonable bystander to suspect that they were included with the specific object of avoiding the statutory protection.”
Deliveroo rejects the allegation, saying that substitution was already an established practice before the new contract was introduced and had no bearing on the CAC’s view.
“The CAC, like all courts, considers how work is performed in practice alongside the contracts in place, to reach their judgement,” a Deliveroo spokesperson said. “Any suggestion otherwise is misleading. Legal evidence overwhelmingly shows riders are self-employed in practice, but what matters to Deliveroo is that we can offer flexibility alongside greater security.
A genuine right to substitution is just one of the elements that make its riders self-employed, the company says. Riders also have no defined hours or locations, are free to reject jobs, and don’t necessarily rely on delivery for their main source of income.
Yet Tuesday’s judgment might seem to run counter to a previous ruling against Uber, which in 2021 was told by the Supreme Court that its drivers are workers entitled to rights such as the minimum wage.
The court told Uber that the “proper approach was a purposive approach,” Bogg said. “You look at the work arrangements and decide if those work arrangements are the kind of relationship that parliament intended to be regulated by the protective statute. Is the party vulnerable to contractual exploitation? If they are, the court ought to construe and apply the test in favour of inclusion.”
Deliveroo’s victory “is therefore a little bewildering,” he said. “Riders are probably at the most precarious end of the labour market. More than most, they need collective bargaining.
“[That] they can use substitutes is a marker of their precariousness, not their entrepreneurial freedom — they’ve effectively been put outside of the scope of collective bargaining rights under the relevant statute,” Bogg said. “It’s a depressing judgment. It elevates formal legal arguments over the substantive need that people have for these protections.”
But hope springs eternal. From analysts at Jefferies :
The IWGB’s pursuit of Deliveroo has long given the evidence of extreme obduracy. What really matters from here is: 1. The outcome of the next general election (by Jan ‘25), especially given the polls indicate a potential Labour win; & 2. The final position of the EU’s Platform Work Directive on the presumption of employment (as this will be a lead indicator for policy for any potential incoming Labour gov). On the latter, the smoke signals from Brussels are encouraging.
Deliveroo shares, little changed in the wake of the judgment, are 64 per cent below their August 2021 peak. Riders of the world, rejoice.
Further reading:
— Gimmicky Gorillas (FTAV)
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