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Employment Status - Workers and Substitution Clauses

In recent years there have been a significant number of cases which have continued to complicate the issue of whether an individual has the status of an employee, worker or is self-employed.

It is an important point because employees have the full suite of employment law rights and workers also have certain employment rights such as a right to paid holidays and the national minimum wage.

When considering if an individual is a worker, one of the key questions is whether the individual performed the work or services personally.

The requirement for personal service is often examined by considering whether the individual genuinely has the right to provide a substitute to do the work.

The recent case of Stuart Delivery Limited v Augustine considered the nature and reality of a substitution clause in some detail.

Mr Augustine was a delivery courier for Stuart Delivery Limited ("the company").

He agreed to be available to undertake deliveries during allocated "slots" on set dates at specific periods of time. Once he had accepted a "slot", he had to carry out any deliveries offered to him and could not work for any other delivery companies.

The nature of the arrangement between the parties was that Mr Augustine could release the slot he had signed up to using a company app and this slot could then be picked up by other approved couriers. However if the slot was not accepted by another courier, Mr Augustine would either have to undertake the deliveries or face penalties.

An important consideration for the Tribunal was whether this arrangement represented an unfettered right for a substitute to undertake the work, therefore meaning no personal service was required by Mr Augustine.

The case turned on its facts and it was noted that Mr Augustine ultimately had no control over whether he would be released from his obligation to undertake the delivery work. It was entirely dependant on whether another courier signed up for it and he had no control over whether, or indeed who, picked up the slot he wished to release.

The Employment Appeal Tribunal upheld the Tribunal's decision that this situation did not amount to a right of substitution at all and the provision was not inconsistent with worker status.

What can we learn from this case?

This case continues a long line of cases in which individuals have established worker status.

If individuals are genuinely self-employed it is important that any contract terms reflect this, including a substitution clause.

However, the contract is not determinative and the fact that there is a substitution clause in the contract will not lead to a Tribunal automatically determining that the person does not have to provide personal service.

Tribunals will look beyond the contract and consider whether, based on the facts, the individual genuinely has an unfettered right to send a suitable substitute to undertake the work and if that actually happens in practice. The parties should therefore be clear about this point and be able to evidence that the individual can genuinely send a substitute to undertake the work.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.
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