The Court of Appeal has upheld earlier decisions of the ET and EAT in another gig economy case. This ruling confirms that the ability to offer a piece of work to a substitute does not mean that the service is not provided personally. Therefore, they cannot be found to be a worker.
What the law says…
Section 230(3) of the Employment Rights Act 1996 defines a worker as someone who has “entered into or works under a:
- contract of employment or
- any other contract, whether express or implied and (if it is express) whether oral or in writing, 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
Sub-section (a) confirms that all employees are workers and, as such, are entitled to worker rights.
What rights a worker has will depend on their status under employment law. This can be determined by the contractual documentation. If the contract doesn’t reflect the reality of the arrangement, you must look at how the arrangement operates in practice.
In Pimlico Plumbers v Smith  the Court of Appeal was asked to consider whether the obligations to provide personal service were negated by a right to send a substitute in the documentation. The court held that:
- An unfettered right of substitution is inconsistent with an obligation to perform work personally; and
- A conditional right to substitute may or may not be inconsistent with personal service. This depends on the conditions that attach to the exercise of the right.
Stuart Delivery Ltd v Augustine
Facts of the case
In this case, the claimant worked as a courier for Stuart Delivery. Jobs could be accepted on an ad-hoc basis. Alternatively, jobs could be pre-arranged. To do this, a courier would sign up for time slots which had additional financial incentives. If the courier could not, or didn’t want to, work that ‘slot’ they could offer it to other couriers on the same platform. However, if no one else took it, there would be penalties for the original courier.
The claimant claimed that he was a worker during the time working for Stuart. This would mean unauthorised deductions from pay were prohibited. It would also enforce his rights under the WTR.
What the employment tribunal decided
The ET upheld the claim that the claimant was a worker. They referred to the decision in the above Pimlico Plumbers case. Using this, they found that the right here was not unfettered. The conditions attached to it were such that the service was personal. Indeed, it was questioned if there was the right of substitution (argued by the respondent) at all. It was not found in the contract and merely existed to notify others of the availability of the slot via the shared platform used to register for work.
What the employment appeals tribunal decided
Having been successful in this claim at ET, the matter was appealed to the EAT. The respondent did this on the basis that the ET had erred in law in its understanding of worker status. They believed that the right of substitution in the agreement meant that he was not required to perform the work personally.
This was rejected by the EAT, who stated that “… it is not a right of substitution at all. It is merely a right to hope that someone else in the pool will relieve you of your obligation. If not, you have to work the slot yourself. You cannot, for example, get your mate to do it for you, even if s/he is well qualified. All you can do is release your slot back into the pool.”
What the court of appeal decided
The question of status, and in particular the right of substitution, was then put before the COA. The decisions of the ET and EAT were both upheld by this court. They found that there was an obligation to personal performance. This was due to the nature and extent of the practice of permitting substitution in operation here.
The appeal was dismissed.
What this means for employers
This case doesn’t set down strict guidelines for when the ability to substitute will negate personal service. However, it does give us insight into how the courts are continuing to approach these cases. This case showed the court's willingness to look at the matter as a whole. It also shines a light on the practicalities attached to the ability to pass work on to another.
Therefore employers need to be careful about how they operate in areas such as this. Contracts need to be carefully written and followed in practice. This will ensure you are implementing the sort of working relationship you want for your business.
Be prepared for the implications of this ruling. Contact Croner today. We help you make sense of the rules affecting your business and help you stay on the right side of the law.
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