Deliveroo drivers are employees, not self-employed: a new ruling from the Netherlands
Until February 2018, Deliveroo’s meal delivery staff in the Netherlands worked on the basis of employment contracts. Then Deliveroo decided to stop offering these employment contracts. From then on, the delivery drivers worked on the basis of a contractor agreement (that is, as self-employed contractors).
The Subdistrict Court ruled in the first instance that, partly because of the delivery and planning system that Deliveroo used for its drivers at the time, Deliveroo exercised influence over the way in which they performed their work. This system was set up in such a way that Deliveroo could determine which slots the delivery drivers could sign up for, which was to Deliveroo’s advantage. According to the Subdistrict Court, this indicated a relationship of authority between Deliveroo and its delivery drivers, which is an important element in establishing there is an employment relationship. Moreover, the way of working had not substantially changed since the introduction of the contractor agreement. Deliveroo appealed against this judgment.
The question of whether there is an employment contract in these circumstances is very topical. At the end of 2020, the Supreme Court rendered an important judgment in this matter. According to the Supreme Court, this is exclusively based on the factual circumstances: if there is work, wages and service and this continues for a certain time, the relationship will qualify as an employment contract. The assessment must be made on the basis of the rights and obligations agreed by the parties. The intentions of the parties with regard to the nature of the agreement between them are no longer relevant.
The Court of Appeal judgment on Deliveroo
On the basis of the above, the Amsterdam Court of Appeal has ruled whether Deliveroo’s delivery drivers work on the basis of an employment contract or not.
Deliveroo and the delivery drivers differ in opinion about the (contractual or actual) freedom which they have to accept or refuse an assignment.
Since March 2020, Deliveroo has changed its delivery and planning system by using the ‘free login system’, which gives delivery drivers more freedom to decide when they want to start working and which delivery requests they want to accept. On this point, the Court of Appeal ruled that the freedom with which the work has been performed since this change may indicate the absence of an employment contract, but in the opinion of the Court of Appeal, this element is not of such importance that it does not constitute an employment contract.
Deliveroo pays the delivery drivers per delivered order. According to the delivery drivers, the wages were set unilaterally by Deliveroo, which is an indication of an employment contract. Deliveroo objects that the wages are subject to market forces. The market forces the company refers to are the algorithm that offers a higher price per order when there is a high demand for meals but few drivers are available. However, the Court of Appeal did not find that this system permits delivery drivers to have an actual influence on the level of pay. This element therefore points to an employment contract rather than not, according to the Court of Appeal.
3. Relationship of authority
The Court of Appeal also answered the question of whether there is a relationship of authority between the delivery drivers and Deliveroo in the affirmative. The location of the delivery driver in relation to the restaurant and the customer plays an important role in this. The delivery driver’s GPS location is tracked continuously once the delivery driver has started work. This system provides Deliveroo (whether through its customers or not) with far-reaching monitoring possibilities, which the Court of Appeal considers to be a form of authority. The payment model established unilaterally by Deliveroo also points to Deliveroo’s interference in the delivery process and therefore to a relationship of authority. A third indication for this is that the work carried out by the delivery drivers is normal company work, that is, the delivery of meals is one of Deliveroo’s core activities.
4. Other factors
Another factor is that Deliveroo has taken out accident insurance for its delivery drivers, which is paid for by the company. This means that if the delivery drivers have an accident during their work, they can be compensated for damages. The (limited) continued payment of delivery personnel in the event of illness is also in line (to the same limited extent) with the rights and obligations that apply on the basis of an employment contract.
Ultimately, the Court concluded that (almost all) circumstances point to an employment agreement between the delivery drivers and Deliveroo.
What does this ruling mean in practice?
This ruling shows (again) that the question of whether there is an employment contract is very topical. The answer to this question is so crucial, because it has considerable consequences for both employment law and tax law. Incidentally, it is not certain whether this ruling will also have direct consequences for meal delivery companies or for other self-employed workers. Deliveroo has also announced that it will appeal to the Court of Cassation against the ruling.