Fourth Time Unlucky? Substitution Clauses And The Ongoing Saga Of Deliveroo’s Workers’ Rights

Vinson & Elkins LLP

Vinson & Elkins LLP

[ co author: Afzaal Abidi]

The ‘gig’ economy has been the subject of much commentary in recent times, particularly with regard to the legal status of its workers. As we reported recently, the UK Supreme Court’s ruling that Uber BV’s (“Uber”) drivers are “workers” under UK employment laws, rather than independent contractors, has the potential to significantly impact Uber’s business and public perceptions of the business brand. In the wake of the Uber decision, many commentators were left wondering whether Deliveroo would be the next domino to fall, particularly given the extensive criticism the company has received for its reliance on ‘gig workers’.

It may come as a surprise, then, that on Thursday 24 June the UK’s Court of Appeal upheld the 2017 finding of the UK’s Central Arbitration Committee that Deliveroo couriers are “self-employed” (as opposed to “workers” or “employees”), and therefore cannot form a union or collective bargaining unit. This is the fourth time that UK courts have upheld the self-employed status of Deliveroo couriers, which the Independent Workers’ Union of Great Britain has been fighting since the Central Arbitration Committee’s findings were released in 2017.

In reaching its conclusion, the Court of Appeal focused heavily on a provision within the agreement between Deliveroo and its couriers which allowed Deliveroo couriers to pass their delivery jobs onto substitute couriers if they could not, or simply did not want to, perform the duty themselves. By contrast, Uber exerts a higher level of control over its drivers (for example, Uber has the ability to log its drivers out of the Uber app), and the contracts its drivers enter into do not feature substitution clauses like those found in Deliveroo’s. Another key distinction between the two cases is that Deliveroo’s appeal was focused on its couriers’ ability to unionize, while the Uber case was more concerned with the rights of its drivers under UK employment law.

Lord Justice Underhill, one of the three judges that heard the appeal, said that while the verdict may be seen as counterintuitive given gig workers may have a higher need for unionising for better pay and conditions, the ruling did not remove the right to organize as a whole – rather, it simply removed the right to do so through a trade union.

The decision by the Court of Appeal will likely result in companies reviewing their practices and amending their substitution clauses to ensure they are effective and genuinely available, and that the companies have evidence to that effect.

*Afzaal Abidi is a Trainee Solicitor at our London Office

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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