Case update (1): Worker status and substitution

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Summary:  Does a courier’s ability to use an app to release their time-slot to other couriers (from the same company) provide sufficient right of substitution to defeat a claim to worker status?

No, says the Court of Appeal in Stuart Delivery Ltd v Augustine available here.

Background: The law groups staff as employees, workers or self-employed and provides different levels of protection. Employees have the most protection and the self-employed the least. Workers are in the middle and are entitled to some statutory rights, including those in relation to the national minimum wage, working hours, annual leave and protection from discrimination.

To establish worker status under s230 of the Employment Rights Act 1996 (ERA) there must be a contract for ‘personal work or service’.  This means that a promise simply to get the work done by somebody is not enough. It has to be the person contracted with. This means an ability to delegate the work to another person could be fatal to a claim of personal service.

However, to defeat a claim of worker status, the right to substitute must not be overly restrictive. How far an employer can go to restrict their staff’s right to substitution before they gain worker status, was considered by the Supreme Court in Pimlico Plumbers Ltd v Smith (see here for our update on this). In this case the plumbers engaged by the company were only permitted to appoint a substitute from a pool of colleagues. This effectively meant they could only send a substitute approved by the company.  The Court held that this restriction on the plumbers’ substitution rights went too far and the plumbers were overly restricted in their right to substitute and were therefore workers.  In summary, the “dominant feature” of the plumbers’ contracts with Pimlico was an obligation for them to perform work personally.

Facts:  Mr Augustine worked as a courier for Stuart Delivery.  His options for work were either to accept individual delivery jobs or to sign up for time slots via an app (which meant being available in a certain area and time).  However, couriers were not paid for time slots if they did not remain in the area for 90% of the time; were unavailable for more than six minutes; or refused more than one delivery.

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, they could send a Release Notification via the app that they wished to give up the slot.  However, unless another Stuart Delivery courier offered to take up the slot, the original courier had to complete the slot or face penalties.  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 they had achieved the required number of deliveries that week).

When the relationship ended, Mr Augustine claimed that he was a worker. Stuart Delivery argued that he was self-employed as he could send a substitute to work on his slot and for that reason was not obliged to perform services personally.

Tribunal and EAT decision

Mr Augustine was a worker. His right to substitute was overly restrictive and did not cancel out the requirement to provide services personally.

Stuart Delivery appealed.

Court of Appeal decision

The Court of Appeal dismissed the appeal and agreed Mr Augustine was a worker. The ‘dominant feature’ of the contract was personal service despite the right to substitute.  This was because Stuart Delivery’s working arrangements were designed to ensure that couriers worked the slots for which they had signed up. The couriers did not have freedom to choose their own substitute.  Sending a Release Notification for circulation on the app only for other couriers already working for the organisation, (who may or may not be interested in the job) was not the same as an unrestricted right to send a substitute.

However, the Court of Appeal clarified that it was not establishing a rule that limiting permission to appoint a substitute from a pool of colleagues would always lead to a finding of worker status.

Also, although the question of personal service involves looking at contractual terms, in light of Uber, the focus should be on investigating and evaluating the way in which the arrangements operate in practice (including the extent and nature of substitution).

Implications:  This case highlights how central substitution (and the freedom to do so) is to the question of worker status.  An unrestricted right to provide a substitute will likely defeat a worker status claim; but limiting the choice of substitute to a pool of colleagues will not.

However, as usual in worker status cases, there are no firm rules on this and an analysis of the day-to-day reality of the working arrangements in each case is required. If employers want to ensure their staff do not attain worker status then they need to objectively and robustly evaluate the way their arrangements with staff work in practice.  Having said that, the simple take away point here is that to engage independent, self-employed, contractors; businesses need to take a laid back approach to who delivers their services.

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