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Deliveroo tribunal: Are businesses taking workers for a ride?

Deliveroo tribunal: Are businesses taking workers for a ride?

Monday 3rd July 2017

The legal battle surrounding the ‘gig economy’ rages on. We’ve had an election where the party in the ascendency pledged to ban zero-hours contracts, Uber lost a landmark case which ruled against its argument that its drivers were self-employed  and Pimlico Plumbers recently lost an appeal over a similar ruling.

Now it seems that Deliveroo could be the next domino to fall. The direction of travel in the case law has been very much in favour of workers. Rightly or wrongly, it looks likely that the Deliveroo verdict will go much the same way.

The court’s decision, when it comes, will hinge on a number of factors:  the level of control the company exerts over its riders, how much flexibility the riders have in reality and what structures are in place to obligate them to fulfil their shifts or meet certain delivery targets.  

If the company is enforcing set service levels – making workers turn up at specific  times and work a minimum number of hours – there will be a strong case to say that Deliveroo riders should classed as employees, particularly if there are penalties in place for not meeting these requirements. Many would argue that Deliveroo shouldn’t stipulate a certain level of commitment from workers without affording them the rights and benefits that employment entails.

Each case will turn on a detailed examination of the working arrangements. However there are certain analogies that can be gleaned and it would be unusual if the  Deliveroo ruling went against this emerging trend. Unless there are some unexpected revelations we are likely to see the pattern continue, further highlighting the need for businesses to take heed and identify whether they are at risk of a similar legal claim.

A comparable ruling could have very real consequences should a business fall foul and the financial ramifications could be severe.

If a court decides that persons who have been treated as self employed should have been classed as workers or employees all along, the businesses may be liable for a range of liabilities including claims for back holiday pay. There are also employment tax issues and companies may also risk their tax issues being subject to scrutiny. . For a small to medium-sized business working with a number of ‘casual’ workers, the impact could be catastrophic.

Businesses should also not underestimate the potential reputational damage of such a court case. The ‘gig economy’ is a hot topic at the moment so cases pertaining to workers’ rights are always likely to garner national media attention. Deliveroo and Uber are prime examples.

For companies that do contract self-employed workers, now is the time to evaluate these relationships. Does the level of commitment constitute actual employment? If there is the potential for a claim, businesses should be proactive in addressing this to find solutions before it becomes a legal issue.

The first step may be to communicate with workers and find out what they value more – the flexibility and freedom of self-employment, or the security and benefits of being employed by the company.

Deliveroo has made the case that a lot of riders prefer to be self-employed because they can set their own hours. However, others have made the point that this level of flexibility does not need to be at the expense of basic employment protection – why can’t we have both?   

As part of evaluating whether a business is vulnerable, areas that are susceptible to scrutiny should be identified including a review of any contractual documents. If there are parts of the working relationship that bear the hallmarks of employment, it might be necessary to consider whether the business can sustain a change in the nature of engagement with both its existing workers and for future hires. Alternatively, working arrangements could be tweaked to align them more with the idea of self-employment. 

For example, Deliveroo abandoned the requirement for workers to wear a uniform, for example. While this may seem a trivial change, the court’s judgement will be based, in part, on how much control the company exerts. A dress code is an element of control that, in some cases may not be essential and provides an example of freedom that might not be associated with actual employment.

Businesses can also look to provide workers with the choice of being classed as self-employed or an employee of the company. To do this effectively it might be necessary to develop new ways of working to make the self-employed option more attractive.

Using Deliveroo as an example, the company has proposed a ‘pay-per-ride’ remuneration scheme where workers are paid for the deliveries they complete rather than by the hour. The company has argued that workers can earn more this way. The issue now is that this was implemented retrospectively. Proactively suggesting an option like this to workers might make self-employment more beneficial and reduce the risk of a court case.

In this event, drawing up new contracts might be necessary. Again, the key here is to be proactive and communicate with the workforce to try and find a mutually beneficial arrangement. Firms can then write contracts that reflect the new arrangements. This also provides an opportunity for a line in the sand to be drawn where workers may agree to new terms with the understanding that they will not seek back-pay for holiday or overtime although there is a set process to follow if staff are to forgo legal rights.

Businesses should be aware that high profile cases such as those lodged against Deliveroo and Uber have made it very clear to workers what legal avenues are open to them should they feel they are being mistreated.

Carrying out a full audit of working arrangements and being upfront with staff is the key to avoiding legal risk and maintaining positive relationships with the workforce.

Lee Jefcott, employment partner at Brabners LLP.