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In this post, Liz Jackson, Trainee Solicitor, and Max Wiktorsson, Associate, in the Employment Team at CMS, comment on the decision from the Supreme Court in Independent Workers Union of Great Britain v Central Arbitration Committee and Anor. [2023] UKSC 43. The case was heard by the Supreme Court on 25 and 26 April 2023 and judgment was handed down on 21 November 2023.

The Supreme Court held that a group of Deliveroo delivery riders were not in an employment relationship with Deliveroo, and as a result, they could not rely on the trade union rights conferred by ECHR, art 11.

The Law

Domestic Law

When an independent trade union wishes to be recognised as entitled to conduct collective bargaining on behalf of a specific group of workers, it will usually make that request directly to the employer. If the employer rejects the request, the union may seek recognition by following the statutory procedure set out in the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”), Pt I, Sch A1.

Under Sch A1, a union can make an application to the Central Arbitration Committee (“CAC”) for recognition. The CAC is a quasi-judicial body which has power to order an employer to recognise a union and engage in collective bargaining if certain conditions are met. One of the key conditions, is that the people the union seeks to represent are “workers” within the meaning of TULRCA, s 296.

S 296 states that a “worker” is an individual who works, or normally works or seeks to work (a) under a contract of employment (an “employee”), or (b) under any other contract whereby they undertake to do or perform personally any work or services for another party to the contract who is not a professional client of theirs (a “limb (b) worker”).

ECHR

Art 11 protects the right of freedom of peaceful assembly and association, it also contains a specific right to form and join trade unions. Art 11(2) states that no restrictions can be imposed on this right other than those necessary in a democratic society.

The case law of the European Court of Human Rights (“the ECtHR”) is clear that the right to form a trade union only arises in the context of an employment relationship. The concept of an employment relationship for the purposes of art 11 is freestanding and does not depend on the definitions of “worker” or “employee” used in domestic law.

International Labour Organisation (“the ILO”)

ECtHR case law states that to decide whether there is an employment relationship for the purposes of art 11, a court should have regard to the factors set out in the ILO’s Employment Relationship Recommendation, 2006 No 198. That recommendation makes clear that an employment relationship should be assessed with reference to the facts and the practicalities of the relationship, notwithstanding how that relationship is characterised in any contract or other agreement between the parties.

The Facts

A group of Deliveroo riders (“the Riders”) working in the Camden and Kentish town area of London became members of the Independent Workers Union of Great Britain (“the IWGB”). In November 2016, the IWGB made a formal request to Deliveroo to recognise the union for collective bargaining on behalf of the Riders. Deliveroo rejected the request. The IWGB then made an application to the CAC under Sch A1.

Decisions of the Lower Courts

The CAC carried out a detailed analysis of the nature of the relationship between the Riders and Deliveroo, which is discussed further below, and found that the Riders were not “workers” within the meaning of s 296. Therefore, the CAC did not accept the IWGB’s application for recognition. The CAC also rejected the IWGB’s argument that the refusal to recognise it because of the domestic definition of “worker” was in breach of art 11.

The IWGB sought permission to challenge the CAC’s decision by way of judicial review on a number of grounds. Permission was only granted for one of the grounds, that the refusal to accept the IWGB’s application for recognition for the purposes of collective bargaining was in violation of art 11.

In the appellate courts therefore, the IWGB’s challenge proceeded on the basis that the Riders were not workers under domestic law, but that they fell within the class of people protected by art 11, and that as such, the definition in s 296 should be read down pursuant to the Human Rights Act 1998 (“the HRA”), s 3, so that it included the Riders.

The High Court dismissed the IWGB’s judicial review. The IWGB appealed to the Court of Appeal, who upheld the High Court’s judgment. The IWGB appealed again to the Supreme Court.

Issues before the Supreme Court

The issues before the Supreme Court were:

  • Whether the Riders fall within the scope of art 11;
  • If they do, whether that means that Deliveroo can be compelled to engage in (compulsory) collective bargaining;
  • If it does, whether the fact that they had been denied that right on the basis of the definition of “worker” in s 296 is a violation of art 11; and
  • If there is a violation of art 11 because of the definition of “workers”, whether that definition can be read down under s 3 so as to include the Riders.  

Supreme Court Decision

The Supreme Court unanimously dismissed the IWGB’s appeal. It held that the Riders were not in an employment relationship for the purposes of art 11. Therefore, the provisions of art 11 which protect trade union activity do not apply to them. The CAC’s decision to reject the IWGB’s application was upheld.

The Supreme Court emphasised that the concept of an employment relationship for the purposes of art 11 is freestanding and does not depend on the definitions of “worker” or “employee” used in domestic law. When making an assessment of an employment relationship in this context, a court should have regard to the factors set out in the ILO’s Employment Relationship Recommendation, 2006 No 198.

The Supreme Court stated that the CAC had rigorously scrutinised the substance of the relationship between Deliveroo and the Riders. It examined in detail how the contract between Deliveroo and the Riders (a new contract had been introduced shortly before the CAC hearing, which included the substitution clause discussed below) operated in practice and whether the provisions in that contract genuinely reflected the true relationship between the parties. In particular, the CAC found:

  • The contract gave the Riders a broad and “virtually unfettered” right to appoint a substitute to do their job for them;
  • Deliveroo did not police the Riders’ decision to use a substitute, and Riders were neither criticised nor sanctioned for doing so; and
  • Deliveroo did not object to Riders working for its competitors.

The CAC was entitled to conclude that the provisions in the contract genuinely reflected the reality of the relationship and that that was not an employment relationship. As the Riders do not have an employment relationship, they are not able to rely on the trade union rights conferred by art 11.

As the Supreme Court found that the Riders did not fall within the scope of art 11, which was the first issue, it did not have to decide the issue of compulsory collective bargaining. However, as it recognised that there is a lack of clarity in the case law, the Supreme Court went on to look at whether the ECHR requires the UK to legislate to require employers to engage in collective bargaining with unions.

The Supreme Court considered a number of decisions by the ECtHR, including Unite the Union v United Kingdom [2017] IRLR 438, in which it was held that member states have a wide margin of discretion in how they protect trade union freedom. Art 11 does not confer a right to compulsory collective bargaining, so whilst states are free to provide rights that go further than the ECHR requires, as the UK has done by enacting Sch A1, a state will not be in breach of art 11 if it declines to legislate for compulsory collective bargaining as long as there is an ability voluntarily to enter into collective bargaining.

Comment

The Supreme Court’s decision in this case is a landmark decision for the gig economy. It means that individuals working in the gig economy under contracts with substitution clauses may be more likely to not be classed as workers. If they fall short of the worker definition, they are excluded from several rights under UK employment protection legislation, such as rights afforded to workers under the Employment Rights Act 1996, the Equality Act 2010, the National Minimum Wage Act 1998 and the Working Time Regulations 1998 (SI 1998/1833).

However, a nominal substitution clause in a contract is not enough to avoid worker status, it must be a genuine substitution clause. The courts will look beyond how a relationship is formally described in a contract and consider the reality of the relationship.

In Pimlico Plumbers Ltd and Mullins v Smith [2018] UKSC 29, the Supreme Court held that the sole test in deciding whether someone is a worker is whether there is an obligation of personal performance. In Pimlico, it was held that the plumbers were workers even though there was a substitution clause, as the reality was that the only workers who could be substituted were other workers that were contracted to the company. This can be contrasted with the Deliveroo Riders’ unfettered right of substitution.

This decision may seem at odds with the decision in Uber BV and others v Aslam and others [2021] UKSC 5, in which Uber drivers were found to be workers rather than self-employed. However, Uber did not concern art 11 rights nor was there a substitution clause.

There may be change on the horizon, as the Labour Party has committed to, if it wins the next general election, removing the distinction between employees and workers to create a single status for all but the “genuinely self-employed”. Whether that will change anything remains to be seen, as similar difficulties with deciding who is “genuinely self-employed” will remain and employers who want to avoid the people working for them being classified as workers will always try to change their arrangements to avoid a finding of worker status. In the EU, the Platform Work Directive, which is yet to become law, will aim to ensure the correct classification of the employment status of people performing platform work. This, of course, will not be binding in the UK but may be influential nonetheless.