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How Deliveroo gamed the system with employment status

The tide of the gig economy litigation turned dramatically in favour of employers with this week's decision, made by the Central Arbitration Committee, that the "Roomen" and "Roowomen" contracted by Deliveroo are self-employed rather than being workers.

The tide of the gig economy litigation turned dramatically in favour of employers with this week's decision, made by the Central Arbitration Committee, that the "Roomen" and "Roowomen" contracted by Deliveroo are self-employed rather than being workers. As a consequence, they were held not to be entitled to have the Independent Workers Union of Great Britain recognised by Deliveroo as their union.

It was found that there was no obligation to perform work personally because of a clause which allowed contractors to appoint a substitute to carry out work for them. But, crucially, Deliveroo did not just change the wording of the contracts – they changed their entire business model so that the right of substitution did actually apply in practice. Deliveroo riders were permitted to disclose their passwords to colleagues, who could download and log into the Deliveroo app in order to accept jobs.

Although the IWGB complained that Deliveroo's "army of lawyers" had found a way to "game the system", there are reasons to think that the CAC's decision is correct and will be of wider application. The hearing was chaired by HHJ Stacey, an experienced and well-regarded former Employment Judge, who applied a test for employment status identically worded to that used for other areas of employment law.

This is not a quick fix. The particular solution adopted by Deliveroo will not be suitable for all employers, especially those for whom obligations to clients and regulators would make a genuine right of substitution unworkable in practice. But the case demonstrates that there are sometimes ways to negotiate the legal complexities of the modern economy, for those businesses which are willing to reconsider their whole way of working in order to do so.

IWGB is likely to take this case further, and the decision in the Uber case, albeit with different facts, is also making its way through the courts. This is good news for employers but it is far from being the end of the story.

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