The CAC has published a decision holding that Deliveroo’s riders (a network of individuals carrying out delivery jobs for Deliveroo, mainly by bike but also by motorbike or scooter) are self-employed contractors, not workers. This is the latest in the line of gig economy cases and the first in which the company has been successful in avoiding a finding of worker status.

The Central Arbitration Committee (“CAC”) is an independent body which adjudicates on statutory recognition and de-recognition of trade unions, in relation to collective bargaining. This case came before the CAC in the context of an application by the Independent Workers’ Union of Great Britain (IWGB) to be recognised for collective bargaining by Deliveroo in a particular area of London – as part of which, the court had to determine whether the riders were workers.

The case turned on the so-called ‘new contract’ introduced by Deliveroo earlier this year. Crucially, this introduced a right to substitute. This meant that a Deliveroo rider could nominate an individual to perform deliveries in their place, should they wish to. This right was available without Deliveroo’s prior approval, save only that a substitute could not be someone whose own supplier agreement with Deliveroo had been terminated for a serious or material breach of contract, or who, acting as a substitute for any Deliveroo driver, had engaged in conduct which would have provided grounds for termination had they been a direct party to a supplier agreement.

In practice, this wide and unfettered right to substitute was rarely used: a survey suggested that only 14 of the 65 riders who responded had either used a substitute, or knew another rider who did. One rider gave evidence that he regularly allowed a friend to use the app, and that he took a small proportion of the fee he received from Deliveroo, before passing the balance on to his friend.

One reason for substitution being uncommon was that due to the app’s flexibility, it was entirely possible for a rider to mark themselves as unavailable or to log in and out of the app at different times. They did not have to accept a certain proportion of jobs and were not penalised for turning down work. They only had to work one day in a three month period. This meant that the incentive to find a substitute was limited; it was easier to just not work on that particular day or at that time. Using a substitute could also be unattractive as it would involve the rider either lending their phone, or at least their username and password for the app.

IWGB argued that if the right to substitute was as wide as suggested, it would make a mockery of the extensive training given to riders. Deliveroo’s argument in return was that the Panel’s role was not to judge the business sense of the policy, but rather to consider the terms of the contract. Further, the IWGB made submissions about various food safety regulations, suggesting that the absence of control over substitutes put Deliveroo at risk of regulatory breaches.

Considering all of these arguments, the CAC nonetheless held that the substitution right was genuine. Whether it made business sense or not, whether there was a risk of regulatory breaches – that still did not mean that the right was not genuine. There was some evidence of it being used and the CAC found on the basis of the evidence that this meant that personal service was not required and consequently the riders were not workers.

This decision cannot be appealed, but it could be challenged by way of judicial review. As this is a topical and controversial issue (hot on the heels of the Uber decision last week – see our article here) – it is likely that IWGB will seek to challenge the decision. Interestingly, breach of regulatory requirements and control were two important arguments in Uber’s unsuccessful defence, but in this case, considering all the facts, CAC found in favour of Deliveroo.