In Stuart Delivery Ltd v Augustine, the Court of Appeal held that a delivery courier was a worker, even though he had a clause in his agreement which meant that he had a limited right of substitution.

The Employment Rights Act 1996 defines "worker" as somebody working under a contract of employment or someone who works under any other contract and personally performs the work or service for another party to the contract who is not a client or customer of the individual. The requirement for personal service often looks at whether there is a right to substitute someone else to provide the services.  If somebody is genuinely free to provide a replacement to do their work, that points towards self-employment. 

Facts

Stuart Delivery Ltd developed a technology platform that allowed couriers to connect with clients on an app. The app allowed couriers to take individual jobs, or sign up for a time slot.  This meant couriers were required to commit to being available at a certain time in a certain area.  If a courier signed up for a time slot, they could request to release it making it available to other couriers, but if nobody accepted it, the original courier would have to complete it or face a penalty. 

Mr Augustine was a courier for Stuart Delivery who claimed, among other things, various unauthorised deductions from wages.  The employment tribunal had to consider his employment status and whether he was a worker, in particular, if there was an obligation for Mr Augustine personally to perform the services.

Outcome

The Court of Appeal confirmed the tribunal's finding that Mr Augustine was a worker.  The question of whether work is performed by an individual as an employee, worker or independent contractor is a question of fact for the tribunal.  The Tribunal found that even though there was a release procedure, it did not amount to an unrestricted right of substitution as he would only be released from this obligation if another courier took his slot, which he had no control over. 

Stuart Delivery had set up the system with the intention to ensure that Mr Augustine carried out the work and turned up for the specific slots he signed up for, which was key to ensuring that their business model worked. Mr Augustine was restricted in his ability to notify other couriers that he wanted to release his slot, which meant it was insufficient to constitute a right of substitution relieving him of his obligation to perform the work personally. He would not know which courier would take up the slot and also could not suggest a specific person to do so either.

Takeaway

This case provides some helpful guidance for employers in the ever growing gig economy.  Although an unfettered right of substitution points away from personal service, rights of substitution are invariably not truly unfettered, especially where they are designed to comply with certain business standards.  The courts and tribunals will look behind the contracts at the reality of the situation.  Employers will want to take this into account when creating their business models and considering their pay structures and strategies.