The UK Supreme Court has ruled that Deliveroo riders should not be considered employees.
The decision means Deliveroo cannot legally be made to engage with trade unions looking to represent drivers.
In an unanimous judgment on Tuesday (21 November) the court said people delivering for Deliveroo could not be considered employees because they do not have specific hours, can work for rival companies and can appoint someone as a substitute to work in their place.
The court said: “Riders are thus free to reject offers of work, to make themselves unavailable and to undertake work for competitors,” adding that these features of the relationship between Deliveroo and its riders were “fundamentally inconsistent with any notion of an employment relationship”.
The decision comes in a longstanding dispute, after Deliveroo drivers attempted to unionise in 2016 over pay and conditions.
A Deliveroo spokesperson said: “This is a positive judgment for Deliveroo riders, who value the flexibility that self-employed work offers.”
However, the Independent Workers Union of Great Britain (IWGB), said: “Flexibility, including the option for account substitution, is no reason to strip workers of basic entitlements like fair pay and collective bargaining rights.”
It added: “As a union, we cannot accept that thousands of riders should be working without key protections like the right to collective bargaining and we will continue to make that case using all avenues available to us, including considering our options under international law.”
So, with the ruling raising questions for other firms that use gig economy workers, People Management analyses what this means for employers.
What did the court rule?
In 2016, the IWGB requested that Deliveroo recognise it for collective bargaining in the Camden and Kentish Town areas of North London. However, this request was rejected as the drivers were not formally recognised as workers under UK labour laws.
The IWGB put forward a legal case against this; however, the labour law body, the Central Arbitration Committee, ruled that drivers were self employed.
It has since launched a number of appeals, arguing that article 11 of the European Convention on Human Rights gives workers the right to collective bargaining.
However, in the latest ruling, the Supreme Court dismissed this and ruled: "Riders are not in an employment relationship for the purpose of the trade union rights conferred by article 11 is sufficient to dispose of the appeal in Deliveroo's favour."
It added: “Clearly there is nothing in the UK legislation to stop the riders from forming their union or joining the union as they have done.
“There is also nothing to prevent Deliveroo from engaging in collective bargaining with the union to seek to agree the terms and conditions applied to the riders if they so choose.”
What are the implications?
According to Ian Moore, managing director of HR consultancy Lodge Court, this ruling may shed light on how these gig economy jobs operate and "push companies to up their game".
As a result, he said they may begin to provide better working conditions and rights to keep their "image shiny" and attract more workers in this competitive market.
Moore also said there was a possibility that more people may push for additional regulations to protect gig workers, which might be a "tricky" situation for businesses to handle.
“It's also worth noting that this ruling contrasts with the 2021 Supreme Court ruling that classified Uber drivers as workers, not contractors. This shows how tricky and ever-changing the law is when it comes to gig jobs,” he added.
Yvonne Gallagher, partner at Harbottle & Lewis, said the judgment would likely push other employers to include similar substitution power for gig workers. “This is a fundamentally important ruling for the gig economy, not just for Deliveroo. In establishing that the substitution clause works as proof that riders cannot be considered workers, the Supreme Court ruling may give rise to other gig economy companies following the Deliveroo employment approach – where it fits their commercial model,” she said.
Rob Smedley, employment director at Freeths, said: “The Supreme Court has held firm on the current approach to worker status and the need for personal service as the key ingredient.”
But he noted that a right of substitution alongside evidence of it happening in practice remained the “main obstacle” to those trying to secure additional rights.
Shireen Shaikh, employment senior counsel at Taylor Wessing, argued that while this was not a typical gig economy case, it showed the boundaries of what protection article 11 provides in the workplace. “Those operating in the gig economy will nevertheless be interested to see this outcome as gig workers continue to demand that their voices be heard, regardless of whether they fall outside a formal bargaining mechanism,” she said.
Nick Hawkins, partner in employment at Knights, said: “This is a very significant ‘win’ for Deliveroo in the ongoing ding-dong battle between gig economy ‘workers’ and businesses.”
He added that this will be a ruling that other gig economy enterprises will have been "closely" observing, with some double checking for the presence of substitute clauses in their contracts.
“What will be key though is that those clauses are meaningful and that in reality an individual is genuinely able to send a substitute in their place, rather than it simply being a term of the contract that is not exercised in practice,” Hawkins said.
What should employers be doing?
Andrew Willis, associate director of legal at Croner, told People Management it served as a useful reminder that it was “imperative organisations correctly categorise those who work for them and they should be prepared for it to come under scrutiny”.
“Despite what the terms of a contract might say, tribunals can assess the reality of the situation when it comes to employment status,” he said.
Willis also said that if the relationship between the parties does not reflect what is outlined in the contract, tribunals can determine that individuals are of a different employment status and are entitled to additional employment rights. “This can leave an organisation liable for claims of holiday pay and minimum wage if individuals are found in reality not to be self employed. Getting it right from the start is consequently crucial,” he said.
According to Keely Rushmore, employment partner at Keystone Law, the ruling is “undoubtedly significant” for anyone working in the gig economy. However, she highlighted that, while the news may be welcomed by companies in this sector, they must remain “alive” to the fact that just inserting a right of substitution in a contract will not automatically refute a claim of an existing employment connection because the “right must be genuine”.