Deliveroo, the ‘gig’ economy and employment rights

Can it really be that Deliveroo has a clause in its couriers’ contracts forbidding them from challenging their status in the Employment Tribunal? It seems that part of the agreement that a courier signs provides:

“You further warrant that neither you nor anyone acting on your behalf will present any claim in the employment tribunal or any civil court in which it is contended that you are either an employee or a worker,”

Deliveroo don’t seem to be denying the story as such – but are hiding behind the rather unattractive argument that the contracts were written with the help of ‘legal experts’. If that is so then I’m sure that the advice that went along with the draft was ‘well you can put this in the contract, but it won’t have any legal effect’.

Any employment lawyer worth his or her salt will tell you that s.203 of the Employment Rights Act renders any contractual clause void in so far as it purports to prevent an individual from bringing an employment tribunal claim (s.144 of the Equality Act does the same thing for discrimination claims). No competent lawyer would have failed to point out to Deliveroo that its proposed clause was likely to be totally unenforceable.

Presumably Deliveroo just didn’t care. The purpose of the clause is clearly to deter claims in the first place. But the fact that they think that they may need to do that seems telling. The press report that Deliveroo couriers are self employed. But are they really? If Deliveroo are really confident on the point, why are they so keen to ensure that it doesn’t get tested?

The truth is that the issue is a complicated one. The question of who does and does not enjoy employment protection rights is at the heart of what is effectively a decades old arms race being conducted between the courts and a certain kind of employer keen to avoid any legal obligations towards those whose work generates their profit.

Employment status and employment rights

Because if you can ensure that the people who work for you are not your employees, then you can avoid the irritating obligation to behave reasonably when dismissing them, as well as a host of other rights from redundancy payments to shared parental leave. If you can go further and show that they are not even ‘workers’ (someone contracted to perform work for you, but who is not in business on their own account) then you have the added bonus of not having to give them any paid annual leave or pay them the National Minimum Wage.

So there is clearly an incentive for employers to create relationships that don’t qualify for employment rights. But doing that takes a certain amount of ingenuity. You might think for instance that you could just insert a clause in the contract to say ‘you agree that you are not an employee or a worker’. But that won’t be enough. You can’t change the nature of something by calling it something else. As Lord Templeman famously said in Street v Mountford (a landlord and tenant case):

The manufacture of a five pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.

I am writing this on an electronic device designed to process information at high speed. I can call it an ‘abacus’ if I want, but that won’t alter the fact that it is a computer. The computer is resting on a flat surface supported by four legs. It is a table, even if I put a big sign on it saying ‘this is a chair’ (and so on…).

So if you want to employ someone without any employment law strings attached, then you need to go beyond the label. You need to be able to point to some feature of the contract which means that it can’t be an employment contract.

The features to concentrate on are the obligation to provide personal service and a rather slippery concept called ‘mutuality of obligation’. This essentially amounts to a requirement that an employment contract must entail some obligation on the employer to provide work and some obligation on the employee to accept it. If there is insufficient mutuality then the individual will not be an employee. If there is no mutuality of obligation at all, then there will not even be a contract. The individual will not be a worker, but just someone who has occasionally done a bit of work around the place.

The trouble with mutuality is that it is too easy for the Tribunal to look at what happens in practice and discern an obligation from the way in which the parties have behaved. If your contract says ‘we are not obliged to offer any work and you are not obliged to accept any work that may be offered’ that is all very well, but if in fact you offer 35 hours a week which the employee invariably accepts then the Tribunal may well be tempted to find that the contract has at some stage morphed into an employment relationship.

The requirement for personal service can be more fruitful. If you give ’employees’ the right to provide a substitute instead of turning up and doing the work themselves then they are under no obligation to provide you with personal service. Jackpot! They are neither employees nor workers and you can treat them as appallingly as you like. Well done.

The downside is that the Tribunal might not believe that you really mean it when you say they can provide a substitute. They might find that the substitution clause is a sham in that neither side ever envisaged that it could really be invoked – and that it was simply placed there in an attempt to avoid even the most basic obligations to treat workers with some decency and respect.

Bogus self-employment

Because there really are employers out there who are engaging in a deliberate pretence that their employees are self employed simply to avoid their obligations as an employer. For every case that reaches the Tribunal and is exposed as a sham, there must many thousands of others where the employee simply accepts the employers assurances that they are self employed and do not qualify for employment rights.

You might detect a cynical tone to this post. But honestly, look at the Supreme Court decision in Autoclenz v Belcher and tell me that my cynicism is unwarranted. In that case Autoclenz argued (unsuccessfully) that people employed to valet cars were self employed sub-contractors even though everything about their day-today work screamed employment. Or take the case of Protectacoat Firthglow Ltd v Szilagyi where the employer went so far as to make employees form a ‘legal’ partnership with a friend before they were given any work – because the case law had said that partners in a firm were not employees (the ruse didn’t work in this case and the Court of Appeal held that the partnership contract was a sham).

But on top of this run of the mill ‘bogus’ self-employment, the ‘gig’ economy and the ‘uberisation’ of the workforce gives many more opportunities for employment law to be sidestepped. If you have a pool of ‘workers’ who can log into an app and choose from a range of work that the ’employer’ has made generally available then you really can avoid any mutuality of obligation. The case being brought by Leigh Day and Co on behalf of Uber drivers is therefore potentially very important. What will the courts make of these new working arrangements and can they be made to fit within our employment law system?

Employment rights in the new economy

If not, then we should revisit the whole idea of what it is to be an employee or a worker. Those concepts have been developed in an era of factories and office blocks with regular shifts and starting times, where individuals must do the work they are given. But the new generation of ‘gig’ workers are in no less need of protection than traditional employees. Indeed the precarious nature of their work means that they are even more vulnerable to sharp practice and unreasonable treatment.

These are issues that the government needs to grapple with. It is worth noting that under the coalition, a review of employment law status was undertaken to address these issues. As I understand it a lot of work was done and somewhere in the vaults of what remains of the Department of Business there will be a comprehensive piece of work looking at all of these problems and suggesting a way forward. Whether that will ever see the light of day, however, remains to be seen.

In her speech before entering 10 Downing Street, Theresa May said:

If you’re from an ordinary working class family, life is much harder than many people in Westminster realise. You have a job but you don’t always have job security…

I know you’re working around the clock, I know you’re doing your best, and I know that sometimes life can be a struggle. The government I lead will be driven not by the interests of the privileged few, but by yours.

If these words are to mean anything, then the Government needs to ensure that these new ways of working do not leave vulnerable workers unprotected against exploitation and unreasonable treatment. I’m sure Deliveroo want to treat their couriers well – but it is obviously hard to resist the temptation of creating a relationship in which they are not obliged to. Removing that temptation is one way in which Government can help this new sector develop in a way that benefits everyone.

 

About Darren Newman

Employment law consultant, trainer, writer and anorak
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5 Responses to Deliveroo, the ‘gig’ economy and employment rights

  1. Corri says:

    The phrase ‘you can put lipstick on a pig … but it is still a pig’ comes to mind!

  2. Pingback: Jeremy Corbyn’s Plan for Compulsory Collective Bargaining | A Range of Reasonable Responses

  3. Joe says:

    If it turns out couriers should be classed as workers and not self employed, should we receive holiday and sick pay for the time we have worked for our companies? So if I have worked for a year, seven days a week and never received holiday pay, but it turns out the nature of my work is that of a ‘worker’, should I be able to ask my company to back pay holiday and sick pay they didn’t pay me for my year of service?
    Thanks

    • Well it’s a bit complicated if you haven’t taken any holiday at all unless you asked for it and were turned down. Your right is to take the holiday itself rather than the equivalent amount of pay. If you’re keen, I’d suggest going to your local CAB and having them take a look at your situation for you.

  4. Pingback: Theresa May is Reviewing the Situation | A Range of Reasonable Responses

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