Case update (2):  Employment Status – The Right of Substitution

Summary:  Was a delivery courier a “worker“ despite the existence of a contractual right of substitution?

Yes, says the EAT in Stuart Delivery ltd v Augustine, available here.

Background:  To be legally defined as a “worker“, an individual must be obliged to carry out services personally. If the individual has a genuine and unfettered right of substitution, they are not considered to be under such an obligation and will not be a worker.

Facts:  The employee, Mr Augustine, was a motorcycle courier who worked for Stuart Delivery Ltd, a technology platform connecting couriers with clients via a mobile app.

Couriers engaged by Stuart Delivery Ltd provide both “ad hoc“ deliveries, when they choose to accept a job via the app, and “slot”‘ deliveries.  These deliveries are scheduled during particular time brackets which couriers sign up for in advance and this ensures Stuart Delivery Ltd has couriers available at times of high demand.

Those couriers who sign up for a slot are guaranteed a minimum rate of pay per hour but have to remain in the relevant geographical zone and can only refuse one delivery during the slot. A courier can elect to release a slot he or she has already signed up for and make it available to other couriers to accept (“the release procedure“). However, that courier remains liable for completing the delivery if no-one else accepts the slot and faces sanctions for failing to do so.  Mr Augustine made ad-hoc deliveries and also signed up for slot deliveries.

Mr Augustine brought Tribunal claims against Stuart Delivery Ltd, including claims for unauthorised deductions and holiday pay.  He argued that he was owed these payments as he should be categorised as a worker while carrying out slot deliveries.

Stuart Delivery Ltd argued that Mr Augustine was not a worker, but rather an independent contractor in business on his own account.  This was because he was not under an obligation to perform services personally as his ability to release a slot undermined the obligation of personal performance.

The Tribunal and the Employment Appeal Tribunal upheld Mr Augustine’s claims.  Mr Augustine could not be said to be running a business on his own account and was therefore a worker. That meant he was entitled to benefits, such as holiday pay and the National Minimum Wage.

The courts considered that the release procedure was not an unfettered right of substitution such as to undermine the obligation of personal performance. Mr Augustine had no control over who (if anyone) would accept a released slot, and Stuart Delivery Ltd had the ability to withhold consent to any substitute courier, since it controlled who was accepted into its pool.  There was no right of substitution, merely a right to hope that someone else in the pool would take on the obligation.

Implications: This case clarifies that if employers want to ensure that they engage independent contractors, rather than workers, they should carefully draft their contracts to ensure that a right to substitute is unfettered.   A right to substitute only with the consent of another person, where that person has the discretion to withdraw consent, will not be sufficient.

Further, employers will need to ensure that the contract mirrors the reality, as courts will look carefully at how the right actually works in practice.