Employee status and franchisees

Stojsavljevic v DPD Group UK Ltd

Owner-driver franchisees who carried out delivery and collection services for DPD were neither employees nor workers.

Background

In 2013, two owner driver franchisees (ODFs) entered into DPD’s standard form franchise agreement relating to the provision of parcel delivery and collection services. They were given a non-contractual operating manual which required the ODF to supply a driver (who could be the ODF or another person) to perform the services. According to the manual, if an ODF needed to engage a substitute driver, they would need to supply a copy of the driving licence of the proposed driver and complete an application form, for DPD to authorise the substitute. It was the OFDs’ responsibility to ensure substitute drivers were trained in accordance with DPD’s procedures and policies. Following a dispute at work, the ODFs claimed at tribunal that they held either employee or worker status. They argued that DPD’s oversight in vetting drivers employed by the franchisee could ‘suggest a degree of control beyond that of an individual carrying on business in their own capacity’.

Their claim focused on the question of whether the ODFs’ right to provide a substitute driver under their agreements was effectively fettered by stringent requirements imposed by DPD before they could engage any other drivers in their place. The requirements included that the drivers must be aware of the DPD’s practices, be legally entitled to drive in the UK and be engaged for a minimum of 90 days. The tribunal found that these were minimum requirements and genuine terms for business needs, which did not act as a fetter on the ODFs’ right to engage a driver of their choice. The tribunal held that the ODFs were neither workers nor employees. The ODFs appealed.

EAT decision

The appeal was dismissed.

The EAT reviewed the franchise agreement and the relevant case law, including Autoclenz Ltd v Belcher and Pimlico Plumbers. It held that, both on paper and in practice, there was an unfettered right of substitution. Although in practice the ODFs had only used cover drivers who were also ODFs, or drivers of other ODFs, that did not detract from their broad contractual right to use any substitute of their choice at any time.

DPD was entitled to be satisfied that a proposed driver fell within the contractual definition of ‘driver’, namely that they were qualified, had an appropriate driving licence, were 21 or over and had undergone relevant training. DPD had no broader right to refuse any substitute. There was no fetter on the right of substitution and so this was inconsistent with personal performance. The ODFs had a genuine right of substitution which was inconsistent with employee and worker status.

Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2021/2019-000259.html

Comment

This case emphasises that the tribunals will look at each case on its particular facts to decide if in fact there was an unfettered right of substitution and also, despite the wording of the contract, what happens in practice (which is what happened in Autoclenz when they concluded that substitution clauses were just a sham). In this case, even though they were rarely used, the tribunal accepted that there was an unfettered right of substitution and just because it is not used, does not mean that it is not genuine.