Worker Status and Right of Substitution
30th November, 2021
The Employment Appeal Tribunal has recently delivered its decision in the case of Stuart Delivery Ltd v Augustine.
This case has again highlighted the importance of the right to provide a substitute to provide services when considering worker status. Section 230(3)(b) of the Employment Rights Act 1996 (“ERA”) makes reference to a worker being someone providing personal work or services to another party under a contract. When considering whether an individual may have either self-employed, worker or employment status, one of the factors the Tribunal will focus on is whether an individual has the right to appoint a substitute if, for some reason, they are unable to provide the work. If there is no opportunity to provide a substitute, then there is a far greater chance that the individual will have at least worker status.
Stuart Delivery Ltd developed a mobile app connecting couriers with clients. Couriers could opt to undertake individual “ad hoc” or “slot” deliveries. “Slot” deliveries required couriers to commit to being available in a certain area at a certain time, in return for a guaranteed hourly wage. During this time, the courier was unable to leave the area he had agreed to operate in. Further, he could not make himself available to other delivery companies during the period of a “slot”. A courier who signed up for a “slot” could request to release it via the app, thus making it available to other couriers. However, if no one else agreed to work the “slot”, then the original courier was liable for completing it and there were penalties if he failed to do so.
Mr Augustine claimed that he was an employee or, alternatively, a worker within the meaning of section 230(3)(b) of the ERA (referenced above).
The Employment Tribunal held that Mr Augustine was engaged in the capacity of a worker. When Mr Augustine signed up to a “slot” he was required to be available to perform the services personally. It was found that the release procedure did not amount to an unfettered right of substitution. This was because Mr Augustine would only be released from his obligation to undertake the “slot” if another courier signed up and he had no control over whether, or who, picked up the “slot” he had released. In reality, it was found that by signing up for a “slot”, a courier was obliged to perform the work personally because there was a risk of sanctions for failing to do so. It was concluded that these circumstances fell within category five of the situations identified in Pimlico Plumbers v Smith (a right to substitute only with the consent of another person who has an absolute and unqualified discretion to withhold consent is consistent with personal performance).
The Employment Appeal Tribunal upheld the decision that Mr Augustine was a worker. The Employment Tribunal was right to find that there was a no right of substitution.
The ongoing employment status case law, arising from the gig economy, seems to suggest that even if the contract allows the individual to appoint a substitute (which is inconsistent with worker status and an undertaking to provide services personally), if this is not permitted in practice, then worker status is likely.
We recommend that companies review their contractor/ sub-contractor lists and review any terms and arrangements in place. However, as this case highlights, companies must remember that the reality of the relationship is just as important as any written terms and arrangements in place.
Contact us for help and advice.
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