Couriers found to be "workers" due to limited right of substitution

Couriers found to be "workers" due to limited right of substitution

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The Court of Appeal has recently held that couriers working for Stuart Delivery Ltd (SD) are workers and entitled to associated employment rights. SD sought to argue that their couriers are instead independent contractors. 

Their argument failed to impress the court, which found that personal service was the dominant feature of the courier’s working arrangements with SD, as the couriers only had an extremely limited right to send a substitute in their place. Parallels can be drawn with the Supreme Court’s decision in Pimlico Plumbers Ltd v Smith, where plumbers were only permitted to appoint a substitute from a pool of colleagues and such a limited right to substitute was found to be insufficient to negate a requirement for personal service. 

Key legal issue: was Mr Augustine obliged to personally perform the work?

Mr Augustine worked as a courier for SD and the Court of Appeal was called to determine Mr Augustine’s employment status. It was accepted that he was not an employee of SD but the parties disputed whether he was a worker or an independent contractor. The distinction was critical in determining whether Mr Augustine was entitled to valuable employment rights, including holiday pay and the national minimum wage. The definition of “worker” in the Employment Rights Act 1996 is an individual who works under a contract, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual. In this case, the key issue was whether Mr Augustine was obliged to personally perform the work.

Mr Augustine’s working arrangements as a courier

As a courier for SD, Mr Augustine had two options for obtaining work. The first was to accept individual delivery jobs and be paid for each job by reference to the distance travelled and mode of transport. The second option was to sign up for time slots via the “Staffomatic” app, created and developed by SD to connect couriers directly with retailers. Signing up to a time slot required couriers to commit to being available in a certain area at a certain time, in return for a minimum rate of £9 per hour. If they did not remain in the area for 90% of the time slot, or were unavailable for more than six minutes of it, or if they refused more than one delivery job during the slot, they would not receive the guaranteed minimum hourly payment for that slot. The time slots were released on the app every Thursday. Having signed up for a slot, if a courier no longer wanted to work at that particular time, he could send a Release Notification via the app that he wished to relinquish the slot in the hope that another SD courier would offer to take up the slot. If no other courier offered to take the slot, the original courier had to complete the slot or face penalties for missing the slot.  Approximately 10% of time slots were left unclaimed each week. A courier who failed to work two or more time slots in a week would be disqualified from receiving a delivery reward (even if he has achieved the requisite number of deliveries that week).

To what extent did Mr Augustine have the right to send a substitute?

The requirement for personal service often involves a consideration of whether the individual has a right to substitute another person to provide the services. The Supreme Court considered the impact of substitution in the case of Pimlico Plumbers Ltd v Smith [2018] UKSC 29. It confirmed that if the individual has an unfettered right to provide a substitute this is inconsistent with an undertaking to provide services personally and the individual must, therefore, be an independent contractor. However, where the individual has a conditional or partial right to provide a substitute, this may or may not be inconsistent with personal performance; the individual may be a worker or an independent contractor, depending on the degree to which the right to substitute is limited.

Court found that Mr Augustine had only a limited right to substitution

In Mr Augustine’s case, the Court of Appeal found that he did not have a sufficient right of substitution to remove from him that obligation to perform his work personally. SD had established a system of rewards and penalties intended to ensure that couriers worked the time slots for which they had signed up. Sending a Release Notification for circulation on the app among potentially interested other couriers is not the same as the right to send a substitute. Another courier taking up the slot would be unknown to the original courier and it was not the original courier’s right to choose nor put forward a given individual. Critically, if nobody took up the unwanted slot, the original courier would either have to work the slot or face a number of consequences. In the court’s view, this system could not be described as "an unfettered right to substitution".

Dominant feature of contract was personal performance

The Court of Appeal, therefore, concluded that Mr Augustine was a worker rather than an independent contractor during the times when he had committed to a time slot. This decision is consistent with the Supreme Court’s decision in Pimlico Plumbers v Smith, which found that the dominant feature of Mr Smith’s contract with Pimlico Plumbers was an obligation of personal performance, and that the potential to appoint a substitute subject to a significant limitation (in that case, that the substitute had to be another Pimlico plumber), did not negate that. That said, the Court of Appeal was keen to dispel the notice that there is a "rule" that the ability to appoint substitutes only from a pool of colleagues is always inconsistent with an obligation of personal performance. There will, no doubt, be future cases on this point.  

An unfettered right to send a substitute is rare

Both these recent decisions are not surprising, as it will in practice be rare for an individual to have an unfettered right to substitute when performing work as part of a recognised organisation, with an established brand, standards of service, recognised uniform etc. As the Supreme Court identified in Pimlico Plumbers, an unfettered right to substitute means, in effect, that the organisation has no interest in the identity of the substitute, only that the work gets done. Although likely to be a rare occurrence, this was found to be the case by the Central Arbitration Committee in relation to Deliveroo drivers, who were found to have a genuine, unfettered right to send substitute to perform their deliveries (Independent Workers Union of Great Britain v Central Arbitration Committee and another [2021]). However, other such examples of unfettered rights are likely to be few and far between.

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