Summary
The Court of Appeal has upheld an employment tribunal’s decision that a courier, who could release a delivery slot that he had agreed to undertake to another courier, via a smartphone app, worked under a contract for the personal performance of services, satisfying the definition of “worker” under section 230(3)(b) of the Employment Rights Act 1996. The tribunal had found that the ability to release a slot did not amount to an unfettered right of substitution, since the courier would only be released from his obligation if another courier signed up, and he had no control over whether this happened or who, if anyone, signed up. In reality, having signed up for a slot, the courier was obliged to perform personally because there was a real risk of negative sanctions for not doing so. The tribunal found this to be in the fifth category of substitution identified in Pimlico Plumbers Ltd and another v Smith [2017] EWCA Civ 51, namely “a right to substitute only with the consent of another person who has an absolute and unqualified discretion to withhold consent”, which is consistent with an obligation of personal performance.
Overview
There are three categories of individuals providing services for employment law purposes:-
- Employee.
- Worker.
- Self-employed independent contractor.
An employee is defined under section 230(1) of Employment Rights Act 1996 (ERA 1996) as “an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment”. Broadly, there are three basic requirements:-
- Mutuality of obligation – the employer is under a duty to provide the employee with work and the employee is under a duty to perform it.
- Personal service – the employee must perform the work personally and cannot provide a substitute to do it.
- Control – the employer decides the work to be done, the way in which it shall be done, the time when and the place where it shall be done.
A worker is defined under section 230(3) of the ERA 1996 as an individual who has entered into or works under (or, where the employment has ceased, worked under):
- A contract of employment (section 230(3)(a)).
- 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 (section 230(3)(b)). (This is sometimes referred to as the “limb (b) worker” test.)
An individual who is not an employee or worker is often described as being truly self-employed or a truly independent contractor
Personal service and the right to substitute
The requirement for personal service often involves consideration of whether the individual has a right to substitute another person to provide the services. In Pimlico Plumbers Ltd and another v Smith [2017] EWCA Civ 51, Sir Terence Etherton MR summarised the relevant principles on personal service as follows:
- First, an unfettered right to provide a substitute is inconsistent with an undertaking to provide services personally.
- Second, a conditional right to provide a substitute may or may not be inconsistent with personal performance. It will depend on the degree to which the right is limited or occasional.
- Third, by way of example, a right to substitute only when the contractor is unable to carry out the work is consistent with personal performance (subject to any exceptional facts).
- Fourth, a right of substitution limited only by the need to show that the substitute is as qualified as the contractor to do the work, whether or not that entails a particular procedure, is inconsistent with personal performance (subject to any exceptional facts).
- Fifth, 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.
Facts
Stuart Delivery Ltd developed a technology platform connecting couriers with clients via a mobile app. Couriers could opt to undertake individual jobs, or could sign up for one or more time slots via the “Staffomatic” facility on the mobile app. This required couriers to commit to being available in a certain area at a certain time, in return for a minimum rate of £9 per hour. A courier who signed up for a “slot” could request to release it via the app, making it available to other couriers, but if no one accepted, then the original courier was liable for completing it, or incurred a penalty for failing to do so.
Mr Augustine worked as a courier for Stuart Delivery between November 2016 and March 2017. On 9 April 2017, he presented a complaint to an employment tribunal alleging that he had been unfairly dismissed, and was owed notice pay, arrears of pay and other payments. He claimed that he was an employee or, alternatively, was a worker within the meaning of section 230(3)(b) of the ERA 1996. The employment tribunal had to consider whether he was under an obligation to perform services personally, as required for worker status under the ERA 1996.
The tribunal found that he was a worker but not an employee. The release procedure did not amount to an unfettered right of substitution.
The tribunal went on to hold that Stuart Delivery was not a client of any business run by Mr Augustine. On appeal, the EAT agreed with the tribunal’s analysis. On the facts, the tribunal was right to find that there was no right of substitution or, in the alternative, there was a limited right falling within the fifth category in Pimlico Plumbers.
Stuart Delivery appealed to the Court of Appeal on the question of Mr Augustine’s right of substitution.
Decision
The Court of Appeal (Lewis LJ giving the leading judgment, with which Moylan LJ and Snowden LJ agreed) dismissed the appeal.
The court confirmed that the issue for a tribunal is whether a claimant is under an obligation personally to perform the work or provide the services. In its view, Sir Terence Etherton MR in Pimlico Plumbers had sought to summarise the principles to be drawn from existing case law. He had not sought to establish a rigid system of classification or lay down strict rules as to what would amount to personal performance, or when a right of substitution would negate the existence of an obligation to do work personally.
The court held that it will usually be unhelpful to try and shoehorn the particular facts of a case into one of the Pimlico Plumbers “categories” (as they are not in fact categories at all) and then to treat that as the basis for deciding whether a claimant is contractually obliged to perform the work personally. Even in Pimlico Plumbers itself, the Court of Appeal had not disposed of the appeal by fitting the factual matrix into one of the five “categories”. Rather, it had held that, on a proper interpretation of the contract, the claimant was required personally to perform the work and there was no express contractual right to appoint a substitute. When that case reached the Supreme Court, Lord Wilson had emphasised the significance of the limitation of the (contractual) right to appoint a substitute: the substitute had to come from the ranks of Pimlico operatives, who were all bound into a suite of heavy obligations.
Stuart Delivery Ltd v Augustine [2021] EWCA Civ 1514 (19 October 2021)
