Supreme Court decision on Deliveroo riders: more clarity for the gig economy

In a landmark decision for the UK gig economy, the Supreme Court has held that a group of takeaway delivery riders are not in an employment relationship with Deliveroo and so cannot rely on the trade union rights conferred by Article 11 of the European Convention on Human Rights (ECHR) (Article 11) (Independent Workers Union of Great Britain v Central Arbitration Committee and another [2023] UKSC 43).

The decision brings an end to a seven-year legal battle by a group of Deliveroo riders and clarifies the law on trade union recognition applications. However, Jon Tuck, a partner in Baker McKenzie’s employment team in London, warns that “despite some misleading headlines, this is not a case about whether or not workers are able to unionise. The Deliveroo riders are self-employed members of a union. The question was whether they had the right to freedom of assembly under Article 11 and whether Deliveroo was required to recognise the union for the purposes of collective bargaining, which came down to the question of whether there was an employment relationship.”

A group of Deliveroo riders became members of the Independent Workers Union of Great Britain (IWGB), a trade union that is predominantly made up of low-paid migrant workers and actively campaigns for better pay and working conditions. After Deliveroo refused to recognise IWGB as a union for the purposes of collective bargaining, IWGB applied to the Central Arbitration Committee (CAC), which is a quasi-judicial body that can order an employer to recognise a union and engage in collective bargaining under the procedure set out in Schedule A1 to the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).

One of the conditions for recognition under Schedule A1 is that the members of the union are workers within the meaning of section 296 of TULRCA (section 296). The CAC agreed with Deliveroo that its riders were not workers for the purposes of section 296 and so were ineligible for trade union recognition (see News brief “Drivers are workers, but riders are not: what is the difference?”). The main reason for this decision was that the riders had the right to allocate a substitute rider to cover their work and therefore did not have to perform the work personally, as required by limb (b) of section 296. The CAC also rejected IWGB’s argument that refusing to recognise it as a union would breach the riders’ Article 11 rights, which include the right to form and join trade unions.

IWGB sought judicial review of the CAC’s decision on five grounds. With some hesitation, the High Court granted permission but only in relation to one ground: IWGB’s argument that the definition of a worker under section 296 should be interpreted in such a way that it does not exclude riders from exercising their Article 11 rights. IWGB relied on section 3 of the Human Rights Act 1998, which provides that domestic legislation must be interpreted in a way that is compatible with ECHR rights, so far as it is possible to do so.

The High Court dismissed the judicial review challenge, finding that none of the case law of the European Court of Human Rights extended Article 11 rights to situations outside of the employment relationship and agreeing with the CAC that the riders were not in an employment relationship with Deliveroo ([2018] EWHC 3342). Even if Article 11 was engaged, the exclusion of non-workers was a proportionate restriction that achieved a fair balance between competing interests and so would have been justified under Article 11(2).

The Court of Appeal dismissed IWGB’s appeal, emphasising the importance of the obligation to provide services personally, which it referred to it as an “indispensable feature” of the relationship between an employer and a worker ([2021] EWCA Civ 952; see News brief “Determining worker status: is right of substitution a red herring?”). IWGB appealed once again.

The Supreme Court dismissed the appeal, confirming that the riders are not in an employment relationship with Deliveroo and therefore cannot rely on the trade union recognition rights in Article 11. The two main issues before the court were whether the riders were in an employment relationship and therefore fell within the scope of Article 11 and, if so, whether these rights meant that Deliveroo could be compelled to engage in collective bargaining (see box “Compulsory collective bargaining”).

The court emphasised that the concept of an employment relationship for the purposes of Article 11 is independent of the definition of a worker in domestic law. In order to decide whether there is an employment relationship for these purposes, the court should consider the factors set out in the International Labour Organisation Employment Relationship Recommendation 2006 (No 198) (www.ilo.org/static/english/inwork/cb-policy-guide/employmentrelationshiprecommendationno198.pdf). These factors centre on the practicalities of the relationship and how it operates in reality, rather than how the relationship is formally characterised in an employment contract or other agreement.

Looking at the CAC’s original findings of fact, the court considered that it was particularly significant that:

Taking these facts as a whole, the CAC had been entitled to conclude that the contract was a genuine reflection of the reality of the relationship, which was not one of employment. The court said that the broad power of substitution in this case was “totally inconsistent” with the existence of an obligation to provide personal service, which is essential to the existence of an employment relationship for the purposes of Article 11.

At first glance, the decision in IWGB suggests that individuals working in the gig economy under contracts with substitution clauses will not be classed as workers for the purposes of any UK employment protection legislation. This is because the term “worker” is defined in a broadly consistent way, such as in the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998 (SI 1998/1833). However, employers should be aware that simply including a substitution clause in an employment contract is not enough; the courts will look beyond how a relationship is formally described and consider the reality of the relationship (Autoclenz Ltd v Belcher [2011] UKSC 41; www.practicallaw.com/5-507-8331).

In Pimlico Plumbers Ltd and Mullins v Smith, the Supreme Court held that the sole test in deciding whether someone is a worker is whether there is an obligation of personal performance ([2018] UKSC 29; see News brief “Worker status: still no certainty”). Here, the court held that the plumbers were workers even though there was a contractual right of substitution, as the reality of the situation was that the only workers who could be substituted were other workers that were contracted to the company. This can be contrasted with the Deliveroo riders’ unfettered right of substitution, which Jon Tuck describes as “relatively unusual since, depending on the services provided and the impact on customers and consumers, many businesses do want at least some control over who can replace the worker.”

The decision in IWGB may seem at odds with the Supreme Court’s decision that Uber drivers are workers rather than being self-employed (Uber BV and others v Aslam and others [2021] UKSC 5; see News brief “The Supreme Court and Uber: taxi for the gig economy?”). Uber was handed down just a couple of weeks after the Court of Appeal hearing in IWGB and the court heard written submissions as to whether it would affect its decision on the Deliveroo riders’ worker status. However, the Court of Appeal concluded that Uber did not assist as it did not concern Article 11 rights, the question of personal service or the effect of a substitution clause.

At its recent annual conference, the Labour Party committed to removing the distinction between employees and workers to create a single status, if it wins the next general election. “Although this would not mean that self-employed individuals like those in IWGB would gain employment rights, it would potentially mean that unions representing workers under limb (b) of section 296 would be entitled to recognition”, comments Tuck. “The Labour Party has also vowed to simplify the law around recognition thresholds and to strengthen trade unions’ right of entry to workplaces to organise, meet and represent their members and potential members, and to contact remote workers. This is an area where, irrespective of the Supreme Court’s decision in IWGB, we may see great change over the next few years.”

“Employers may wish to consider how they can provide opportunities for the ‘worker voice’ to be heard, and show that it is considered”, Tuck concludes. “Employers with significant numbers of limb (b) workers or, even as here, the self-employed, may want to consider whether there are business or reputational reasons to take account of their views to minimise unrest or dissatisfaction in the future.”