24 Feb 2021 Deliveroo workers have an employment contract
The Amsterdam Court of Appeal does not agree with the so-called entrepreneurship of the meal delivery drivers.
We all know them, the racing Deliveroo meal deliverers. Originally, they worked on the basis of a fixed-term employment contract, but since July 2018 they only work on the basis of a a contract for the provision of services, with the corresponding Chamber of Commerce registration. However, the court in Amsterdam has put an end to this.
In proceedings started by the trade union FNV, the issue is whether this is an employment contract after all, rather than a contract for the provision of services. In the first instance, the Subdistrict Court already ruled that the relationship between Deliveroo and its delivery staff is indeed an employment contract. This was because the nature of the work and the legal relationship between the parties had not materially changed since the beginning of 2018 compared to the previous situation, in which Deliveroo concluded employment contracts with the delivery drivers.
Deliveroo lodged an appeal with the Court of Appeal against this judgment of the Subdistrict Court, but was once again unsuccessful.
First of all, the Court of Appeal indicated that it follows from previous case law of the Supreme Court that the intention of the parties is not relevant when answering the question whether an employment contract exists. For the qualification of an employment relationship, the components 'in service', 'pay', 'during a certain time' and 'labour' must be considered. This qualification must be made on the basis of the rights and obligations agreed by the parties, and taking into account all the circumstances of the case.
As far as the 'labour' factor is concerned, the Court of Appeal considered that the Free Login system gives the deliverers a large degree of freedom to sign in whenever they want, and to accept or refuse rides. Deliverers may also be replaced, but this is not incompatible with the existence of an employment contract, according to the Court of Appeal.
Then there is the 'pay' part: Deliveroo automatically makes a fortnightly payment to the deliverers. According to the Court of Appeal, this is more like an employment contract than an agreement for services; in the latter case, the contractor invoices himself. It was also found that most deliverers are not liable for VAT. After all, the tax administration considers work for which the remuneration is less than 40% of the regular minimum wage to be 'hobby work', in which case no VAT is due. According to Deliveroo, 67% of its delivery drivers work in this way. Based on the FNV Kiem ruling of the Court of Justice, the absence of entrepreneurship is an indication of employment. More than two-thirds of the Deliveroo delivery drivers apparently do not consider themselves to be entrepreneurs. Given the name Deliveroo gives to its contracts (namely Regular), the company assumes that the absence of VAT liability (read: working as a hobby) is the starting point.
This brings us to the 'in service’ part. According to the Court of Appeal, the way in which Deliveroo has its delivery drivers perform their work is more indicative of an employer-employee relationship than of the absence of such a relationship. The Court of Appeal considered that few instructions are needed for the collection and delivery of food. FNV has pointed out that this work constitutes 'regular company work' or a core activity for Deliveroo. Here the Court of Appeal referred to an old judgment of the Supreme Court (Ponstypiste), from which it is deduced that the performance of regular company work can indicate a relationship of authority. According to the Court of Appeal, the delivery of meals is one of Deliveroo's core activities.
The fact that Deliveroo constantly and unilaterally changes the content of the contracts and the way in which the work is organised also indicates a relationship of authority. The Court of Appeal is also clear about the 'Frank' algorithm (which continuously monitors the GPS location of the delivery driver after he logs in): this is a far-reaching control opportunity for Deliveroo of the delivery driver's working methods and is therefore also a form of authority. Deliveroo can also influence the behaviour of delivery drivers by awarding bonuses. Finally, the payment model established unilaterally by Deliveroo indicates that Deliveroo has interfered extensively in the delivery process. This is therefore also an indication of an employer-employee relationship.
Then 'during a certain time': according to the Court of Appeal, it has not been shown that the work of the deliverers is of a negligible extent. The criterion 'during a certain time' has therefore been met.
The conclusion is: only the freedom given to the deliverers with regard to the performance of work is a circumstance that points to the absence rather than the presence of an employment contract. On the contrary, all the other elements and circumstances point more to the existence of an employment contract. Moreover, the freedom given to the deliverers with regard to the performance of work is not incompatible with the qualification of the contract as an employment contract.
In short: there is an employment contract, and not a contract for the provision of services. The earlier opinion of the Subdistrict Court was upheld. The complete judgment of the court of appeal can be read here.
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