Deliveroo: Late substitution leads to a win against the run of play

The Central Arbitration Committee (CAC) has finally given its decision on whether a particular group of Deliveroo riders – those in the Camden/Kentish Town area of North London who are paid per delivery – are workers of Deliveroo or are independent suppliers of services to Deliveroo.

The hearing was in May 2017. As we noted at the time, shortly beforehand Deliveroo had changed its rider contracts, removing prohibitions on riders carrying out deliveries for other companies and the requirement to wear Deliveroo-branded clothing or to give notice of termination.

Although this group of riders’ claim to be Deliveroo’s workers was made in order to establish their right to seek collective representation by a union, essentially the same definition of worker is also used for entitlement to receive national minimum wage, holiday pay and sick pay.

The question of whether Deliveroo deliberately engineered the new contractual terms to prevent a finding that riders are workers is not relevant. What is relevant is identifying the contractual terms the parties agreed in the written contracts and by their working practices.

Crucially, the CAC found that (a) under the new contracts riders are permitted to engage a substitute to carry out deliveries, (b) in fact they sometimes do so and (c) there is no penalty from Deliveroo if they do. An individual who is not required to perform the work personally, cannot meet the legal definition of worker so the CAC decided that these riders are not Deliveroo’s workers.

While this goes against the recent trend of high-profile gig economy decisions such as Uber and CitySprint, this is because the working arrangements for this group of Deliveroo riders is different to those cases.

It is equally important to note that the CAC made no finding as to whether these Deliveroo riders were workers under their previous contracts. If they were, they could bring tribunal claims (within 3 months) for national minimum wage/national living wage, holiday pay and sick pay or civil court claims (within 6 years) for national minimum wage/national living wage only. There is also the risk of individuals referring this to HMRC, which has sweeping powers to order back payments and impose punitive fines.

The riders in the Deliveroo case were not claiming to have been employees with rights to make claims for unfair dismissal or redundancy payments but this is likely to be the next frontier in claims against gig economy companies.

In addition, any business seeking to restructure in order to emulate Deliveroo should proceed with caution. If such changes have the effect of terminating the employment of 20 or more employees, the business could end up with very serious legal and financial liabilities under collective consultation obligations .