Worker status and the obligation of personal performance
In this article, Parklane Plowden Barrister, Roger Quickfall, considers the approach to determining when a limited right of substitution is consistent with the obligation of personal performance following the recent guidance of the Court of Appeal in Stuart Delivery v Augustine.
On 19/10/21, the Court of Appeal (“CA”) delivered its latest decision on worker status: Stuart Delivery Ltd v Augustine  EWCA Civ 1514 (“Augustine”).
On this occasion, the CA was dealing with the obligation of personal performance when there is a fettered right of substitution.
The issue on appeal was whether an employment tribunal (“ET”) was entitled to find that a self-employed courier (“C”) delivering goods by moped for Stuart Delivery Ltd (“R”) was a ‘worker’ for the purposes of s. 230(3)(b) of the Employment Rights Act 1996 (“ERA”).
R had developed a technology platform connecting couriers with retailers via an app.
Couriers who entered into arrangements with R could accept individual delivery jobs and be paid a fixed fee for that job by reference to the distance travelled and the mode of transport.
Couriers could also sign up for one or more time slots via the app. The slots covered the zones with the highest concentration of users at the times of projected highest demand. Couriers were encouraged to sign up for these slots and 93% of couriers worked on these slots.
Once signed up for a slot, couriers committed to be in a particular zone for 90% of the time of the slot, not logging off for more than 6 minutes per slot and not refusing more than one delivery job during a slot. If they satisfied these requirements, they were guaranteed a minimum £9 an hour for each slot (regardless of whether they undertook any deliveries). If they did not satisfy these requirements, they would not receive the minimum payment.
Couriers were also paid delivery rewards if they achieved a certain number of deliveries in a week, but they would not qualify for the reward if they failed to take up two or more slots in a week.
There was no written substitution clause. However, if a courier did not wish to work a slot he had accepted, he could notify other couriers on R’s app who could opt, if they chose, to fill the unwanted slot. C did not know which courier would be taking up the slot and he could not put forward any given individual. If one of the couriers did not take up the slot, C would have to do it or face penalties for missing the slot.
The right of substitution was conditional upon another courier on R’s app agreeing to take up C’s slot. The other courier had to have the same mode of transport and was subject to the same requirements as C of having to stay in the area for 90% of the time, not logging off for more than 6 minutes per slot and not refusing more than one delivery job per slot, to avoid losing the guaranteed payment and suffering the other consequences.
The CA agreed with the ET and the EAT that this was not a sufficient right of substitution to remove the obligation of personal performance.
As employment lawyers are aware, the definition of a worker in s. 230(3)(b) ERA provides, inter alia, that the individual “undertakes to do or perform personally any work or services for another party to the contract …”. This is known as the obligation of personal performance. Anyone seeking to establish themselves as a worker must establish that they are subject to the obligation.
If the individual must perform the work themselves, there is no difficulty: there is an obligation of personal performance. If the individual can send whoever they wish to carry out their work, i.e. the right of substitution is unfettered, there is also no difficulty: there is no obligation of personal performance.
The difficulty arises where the right of substitution is fettered or conditional, i.e. limited or occasional.
Whether a conditional right of substitution is consistent with personal performance
As was held by the CA in Pimlico Plumbers v Smith  EWCA Civ 51,  ICR 657 (“Pimlico Plumbers”) (§84), whether a conditional right of substitution is consistent with personal performance depends on the conditionality; in particular, the nature and degree of any fetter on the right of substitution. In other words: the extent to which the right is limited or occasional. In the same paragraph, the CA gave three examples:
- a right of substitution only when the contractor is unable to carry out the work will, subject to any exceptional facts, be consistent with personal performance.
- 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, will, subject to any exceptional facts, be inconsistent with personal performance.
- a right to substitute only with the consent of [the employer] who has an absolute and unqualified discretion to withhold consent will be consistent with personal performance.
On appeal in Augustine, R argued that the ET wrongly found that C’s right of substitution was consistent with (iii) above when it should have found that it was consistent with (ii).
The above examples were stated by the Master of the Rolls and approved of by the Supreme Court. There has therefore been a tendency for practitioners to regard them as categories into which the facts of a case can be shoehorned to determine whether there is an obligation of personal performance.
However, the CA in Augustine, held that this was the wrong approach because it was unreal to attempt to shoehorn the facts of a case into one of the examples to see whether a right of substitution was consistent with the obligation of personal performance.
The CA held that, to treat the examples as categories, addresses the wrong issue. The issue is not whether the case can be fitted into one of the examples; it is whether there is an obligation of personal performance (§38). Where the right of substitution is conditional, the issue is whether the nature and degree of any fetter on the right or ability to appoint a substitute is inconsistent with any obligation of personal performance (§55).
An important factor is the dominant purpose of the work arrangement when there is a limited right of substitution. Is the employer only concerned that the work is done and uninterested in who does it? Or do they want the individual they have contracted to do it?
As the SC explained in Pimlico Plumbers v Smith  UKSC 29,  ICR 1511, at §32, where there is a right of substitution, it may be helpful to assess its significance by reference to whether the dominant feature of the contract remains personal performance on the part of the person contracted to carry out the work.
In Pimlico Plumbers the SC proceeded on the basis (without deciding) that the claimant had the right to appoint another Pimlico plumber to do particular work where the claimant had subsequently been offered a more lucrative job. The SC held that this was a significant limitation on the right of substitution and was the converse of the situation in which the employer was uninterested in the identity of the substitute, provided only that the work was done.
In Augustine, the system set up by R was intended to ensure that C carried out the work and, in particular, that he turned up for the slots for which he had signed up and did the delivery work during those slots. That was necessary for R’s business model. The limited right or ability to notify other couriers via the app that he wished to release his slot for take up by others was insufficient to remove from him the obligation of personal performance. This was not a situation in which R was uninterested in who performed the work. R wanted to ensure that the courier who took the slot was subject to the same constraints as C to ensure that there were sufficiently reliable couriers available in hot zones at peak times.
The CA observed that there is no rule that a right or ability to substitute only from R’s pool of operatives is necessarily consistent with personal performance. But the CA acknowledged that the courts have recognised that this is a conclusion that employment tribunals can reasonably reach in broadly similar circumstances.
Finally, the CA observed that, in considering whether there is an obligation of personal performance, it may not be necessary to determine whether the substitution arrangements are contractual or merely a practice permitted by R. It was observed that, following Uber v Aslam  UKSC 5,  ICR 657 (“Uber”), the question may be whether, looking at the contractual terms and the way the arrangements operated in practice, there was an obligation of personal performance given the extent and nature of any practice permitting substitution.
In Uber it was held that the contract is not the starting point in determining employment / worker status because employment rights are not contractual but statutory. Whether an individual has statutory rights is therefore a matter of ‘statutory’ rather than ‘contractual’ interpretation. It is therefore necessary to have the purpose of the relevant statutory provisions in mind, i.e. the protection of the vulnerable / those in a position of dependency on the employer, when determining whether an individual has particular statutory rights.
When considering whether an individual is a ‘worker’ where there is a limited ability to appoint a substitute, the issue is whether the nature and degree of any limit is consistent with any obligation of personal performance. In addressing this issue, it is necessary to consider the extent to which the employer is interested in who carries out the work. Trying to shoehorn the facts into one of the so-called Pimlico examples will not be conclusive.
Barrister at Parklane Plowden