Autoclenz v Belcher
The Supreme Court ruled that the individuals in this case were employees, on the basis that substitution clauses in their contracts were actually a sham and that in practice, the work had to be done personally.
Uber v Aslam
It is necessary to look beyond the agreement in place between the parties and look at the reality of its operation. The agreement is neither the start nor the end point for this examination.
Employment Rights Act 1996 (ERA)
230 Employees, workers etc.
(1)In this Act “employee” means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.
(3)In this Act “worker” (except in the phrases “shop worker” and “betting worker”) means an individual who has entered into or works under (or, where the employment has ceased, worked under)—
(a)a contract of employment, or
(b)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;
The claimants in this case worked delivering and collecting parcels under the DPD name as owner driver franchisees (ODFs). They had entered into a standard form franchise agreement and were given a non-contractual operating manual in order to guide them in their work.
By signing the agreement, the claimants committed themselves to supply a driver (either themselves or another) to carry out the services. The manual stated clearly that it was their responsibility to make sure that any substitutes they sent in their place were trained in accordance with the policies and procedures of DPD.
An argument arose which led to a legal dispute as to the employment status of the claimants before the employment tribunal.
EMPLOYMENT TRIBUNAL (ET)
Crucial to the ETs determination in this case was the agreement between the parties. In particular, the right of substitution and how it was operated in practice. The agreement set out in plain terms what the ODFs responsibilities were in supplying a substitutive, including getting them to complete an application form, getting a copy of their driving licence, and awaiting a formal letter of authorisation that the substitute can drive.
It was argued that these terms limited the right of the ODFs to provide a substitute, due to the degree of control placed on the process by which the substitute becomes authorised to drive, and that the manual was not an accurate reflection of the true arrangements between the parties.
This was rejected by the ET, who found that the checks put in place by DPD on substitute drivers were reasonable in light of the duties being performed by them, and that the fact that cover drivers tended to be other ODFs, or drivers for other ODFs, was not contrary to a broad contractual right to provide a substitute, and the ODFs were self-employed.
This was appealed.
EMPLOYMENT APPEAL TRIBUNAL (EAT)
The EAT upheld the reasoning of the ET, and its finding that the agreement between the parties was a true reflection of the relationship between them.
As such, it confirmed that these individuals were self-employed, and not workers or employees.
This case shows the importance of clear written terms between the parties of the agreement, especially when they are strictly adhered to. By having a clear right to substitute, setting reasonable checks and balances on this to ensure the substitute was properly qualified to undertake the work, DPD were able to maintain that personal service was not required and the claimants were self-employed.
When looking to put in place contracts of this nature, employers should take time to consider the right of substitution. It is a fine balance of not requiring personal service, but ensuring that whoever is sent instead has the necessary skills and qualifications to adequately perform the role. What checks are put in place should only be to check this minimum, however, as any more and the right has arguably become fettered.