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The judgement on Deliveroo
8 August 2023

On the 24th of March, the Supreme Court delivered the long-awaited judgment in the Deliveroo case, conclusively ruling that Deliveroo delivery drivers should be classified as employees rather than contractors. The question was whether the Supreme Court would definitively clarify the control criterion, also known as a “relationship of authority”. Although this did not happen, the Supreme Court did formulate 10, non-exhaustive, points of view when assessing whether an employment contract exists.

These include the following points of view:

  1. The nature and duration of the work.
  2. The method used to determine the work and working hours.
  3.  The embedding of the work and the individual performing the work within the organization and business operations of the party for whom the work is carried out.
  4. The presence or absence of an obligation to personally perform the work.
  5. The manner in which the contractual relationship between the parties was established.
  6. nner in which the remuneration is determined and how it is paid (gross or including VAT).
  7. The amount of remuneration provided.
  8. Whether the person carrying out the work runs a commercial risk in doing so (entrepreneurial risk).
  9. The significance attributed to a contractual clause in determining whether an agreement should be classified as an employment contract depends on the actual impact of that clause on the party         performing the work.
  10. It may also be relevant to consider whether the individual performing the work shows entrepreneurial behaviour within the scope of their business activities, such as:

a. Establishing a reputation;
b. Engaging in client acquisition;
c. Tax treatment considerations;
d. The number of clients served or previously served, as well as the typical duration of engagements with a specific client

All the aforementioned points of view carry equal weight during the assessment, without any ranking or prioritization. The determination of whether the conditions specified in art. 7:610 of the Civil Code (BW) for an “employment contract” have been met, continues to depend on a comprehensive evaluation of all the circumstances of the case. The practical relevance lies in further elaborating on several aspects.

For instance, the embedding criterion (3) considers whether the work and the worker are integral to the organization and business operations of the work provider. Significantly, the Supreme Court does not view this embedding criterion as decisive for establishing a relationship of authority and consequently an employment contract. Furthermore, it is noteworthy that the Supreme Court explicitly includes the worker’s embeddedness in the assessment. This aspect may lead to practical debates, as the classification of the employment relationship may vary depending on the individual circumstances.

In addition, the Supreme Court introduces, for the first time, the concept of entrepreneurship as a factor which contradicts the existence of an employment contract (9). If an individual can demonstrate their role as an entrepreneur (9a and 9b), previous entrepreneurial work experience (9d), and recognition as such by tax authorities (9c), these become significant indicators against the presence of an employment contract. Consequently, the perspective of entrepreneurship allows some flexibility for the worker, even when there are indications of either an employment contract, being employed or remaining under an assignment contract.

Regarding the obligation to perform the work personally (4), the Supreme Court ruled that the possibility of being replaced does not negate the existence of an employment contract. In this context, the Supreme Court appears to redefine ‘personal labour’ as a fundamental element of the definition of an “employment contract” in art. 7:610 of the Civil Code (BW) to one of several perspectives for establishing an employment contract. However, it is important to note that the Deliveroo case involved relatively straightforward work, with substitutions occurring only incidentally and without any specific earning model on the part of the worker. Consequently, the significance of the option for substitution was minimal in this particular case.

It is advisable to assess the employment status of individuals within your company and consider whether, based on the aforementioned perspectives, they may qualify as employees. Should you require guidance on this matter, we are available to provide assistance.

The judgement on Deliveroo