The Supreme Court handed down an important ruling in the case of Deliveroo against its food delivery drivers on 24 March 2023. This finally provided a definitive answer to the question of whether the Amsterdam Court of Appeal was right to find that Deliveroo’s delivery drivers were working on the basis of an employment contract.
The Supreme Court upheld the decision of the Court of Appeal. This means that Deliveroo’s delivery drivers are working on the basis of an employment contract. According to the Supreme Court, whether an arrangement should be regarded as an employment contract depends on all the circumstances of the case taken together. The fact that the Deliveroo deliverymen were free to quit if and when they wished, and therefore free to refuse orders, as well as the fact that they were free to be replaced, did not in themselves preclude the existence of an employment contract.
Consequences for practice
This judgment confirms the principle that on the basis of all the circumstances of the case it must be assessed whether there is an employment contract. Whether the person performing the work is acting as an entrepreneur in the course of business may also be important, for example, in view of the number of clients for whom he works (or has worked) and the length of time for which he is committed to a particular client. In addition, it is important to realize that the weight accorded to a contractual provision in qualifying the contract also depends on the actual significance of that provision to the party performing the work. For example, a free substitution clause will be of little significance if, in practice, the person performing the work is replaced only occasionally. In short, contracting away the “personal labor obligation” no longer seems to make sense. It is therefore to be expected that the emphasis will lie even more on the manner in which the parties perform the contract, as a result of which the parties’ intention when entering into the contract will be (even) less relevant.
This ruling may have major implications for the so-called gig economy, referring to a labor market in which temporary, flexible jobs or “gigs” are the norm rather than traditional, long-term employment contracts. In the gig economy, people often work as independent contractors or freelancers, providing their services to various clients on a project basis. With the rise of digital platforms and technological advancements, the gig economy has grown significantly around the world. As a result of this ruling, other platform workers working in the gig economy may also claim or seek to claim workers’ rights, which may lead to changes in how platforms will employ and reward their platform workers.
Background of the Deliveroo case
In June 2015, food delivery company Deliveroo started operating in the Netherlands. Deliveroo’s delivery drivers initially worked under fixed-term employment contracts, but in 2018 Deliveroo decided not to renew these contracts. From then on, it entered into exclusive assignment agreements with all its delivery drivers, which meant that they were no longer treated as employees but as self-employed workers. The Netherlands Trade Union Confederation (FNV) took the position that the delivery drivers, however, were still actually working on the basis of an employment contract and in 2019 claimed a corresponding declaratory judgment from the Amsterdam subdistrict court. The subdistrict court agreed with FNV and found that Deliveroo delivery drivers did indeed work on the basis of an employment contract. On appeal, this ruling was upheld by the Amsterdam Court of Appeal.
Deliveroo appealed the judgment of the court of appeal to the Supreme Court. During the cassation proceedings, Deliveroo decided to terminate its activities in the Netherlands. However, this did not affect the handling of the case, as Deliveroo did not withdraw the cassation appeal.
Deliveroo asked the Supreme Court to overturn the court’s ruling, arguing, among other things, that the delivery drivers were allowed to be replaced and that they were free to work or not. These circumstances, Deliveroo argued, were not consistent with an employment relationship.
A-G De Bock advised the Supreme Court to dismiss the appeal in cassation and uphold the judgment of the court of appeal. In his opinion, he stated, among other things, that it is much more important how the work is organizationally embedded than whether the person for whom the work is performed has a power of instruction, because the existence or non-existence of a power of instruction has little distinguishing power compared to the contract for services.
Supreme Court ruling
The Supreme Court upheld the court’s ruling. This has established that the Deliveroo deliverymen were working on the basis of an employment contract. According to the Supreme Court, whether an agreement should be regarded as an employment contract depends on all the circumstances of the case viewed together. The following may be relevant in this respect:
- the nature and duration of the work;
- the manner in which the work and the working hours are determined;
- the integration of the work and the person performing the work into organization and business operations of the person for whom the work is performed;
- the existence or absence of an obligation to perform the work personally;
- the manner in which the contractual arrangement of the relationship between the parties has been determined;
- the manner in which remuneration is determined and paid;
- the amount of that remuneration; and
- whether the person performing the work is at commercial risk in doing so.
In addition, it may be relevant whether the person performing the work behaves as an entrepreneur in the course of business, for example in view of the number of clients for whom he works (or has worked) and the duration of his commitment to a particular client. According to the Supreme Court, the weight to be given to a contractual clause in qualifying an agreement also depends on the extent to which that term has a real meaning for the party performing the work.
The Supreme Court also addressed the question of whether there are grounds for further general rules or principles for determining whether an agreement is an employment contract, such as a further interpretation of the term “employed by” to include the embedding of the work in the organization or the use of a legal presumption of the existence of an employment contract. However, as this has been the focus of the (European) legislator, the Supreme Court sees no reason to develop the law on these issues.
Are you dealing with self-employed workers in your organization and, as a result of the above, are you unsure whether this is still possible in the same way? We would be happy to help you with this assessment.
Author: Annemarth Hiebendaal