On 16 February 2021, the Amsterdam Court of Appeal delivered a long-expected judgment on the question whether the Deliveroo riders are working on the basis of an employment contract. Previously, the Subdistrict Court of Amsterdam had ruled that they did have an employment agreement. The Court of Appeal has now reached the same conclusion. This means that the Deliveroo riders are working under an employment agreement. In this article we will explain how the Court of Appeal has arrived at this conclusion.
Debate
The distinction between a contract for services and an employment contract is the topic of a (broad) social, political and legal debate. Many judgments have already been rendered on this distinction. For example, in early 2016 the Subdistrict Court of Amsterdam held that a parcel carrier of PostNL was working on the basis of an employment contract. Nevertheless, this distinction is only wafer-thin. In mid-2016 and early 2018, the Amsterdam Court of Appeal ruled that the parcel carriers of PostNL are not working on the basis of an employment contract. This was one of the reasons why the Borstlap Committee, in its end report of early 2020, insisted that this distinction should be clarified. At the end of 2020, the Supreme Court already rose to the occasion by ruling that the intention of the parties is not relevant anymore to the qualification of agreements. In other words: it is not relevant (anymore) what the parties intended.
An employment contract exists if a worker (i) undertakes an obligation to perform work personally, (ii) against payment of wages, and (iii) in the service of an employer (a relationship of authority). The Court of Appeal held that these requirements had been met.
Work
It is not in dispute that the riders are performing work, but they must be under an obligation to perform the work personally. Regarding this, the Court of Appeal considered that the Free Login system of Deliveroo gives the riders a great deal of freedom. By using this system, riders can choose for themselves if, when, where and for how long they want to work. They are also free to let someone else replace them. In the Post NL cases mentioned above, this was one of the main reasons why no employment contract was deemed to exist. However, the freedom of the Deliveroo riders is more restricted, since they are usually only allowed to be replaced by another rider, and cannot set up their own revenue model. Although the riders do enjoy some freedom, the Court of Appeal considered this freedom not to be of such a nature that it excludes the existence of an employment contract.
Wages
It is not in dispute either that wages are being paid to the riders. The question was raised whether the way in which the wages are determined and paid is an indication of the existence of an employment contract. Deliveroo determines (and changes) the wages unilaterally, and riders have not been able to influence this process (by collective actions or otherwise). Moreover, Deliveroo personally prepares the invoices under which Deliveroo pays the wages to the riders every two weeks. The Dutch Tax Administration considers a large part of the riders’ wages – 67% – to be 'hobbyist', and therefore not subject to VAT. The Court of Appeal gathered from a judgment of the European Court of Justice that the absence of entrepreneurship is an indication of employeeship. Therefore, the Court of Appeal held that the way in which the wages are determined and paid suggest the existence of an employment contract.
Relationship of Authority
In addition, the Court of Appeal considers the way in which Deliveroo has the delivery work carried out to be also indicative of the existence of an employment contract. Riders have relatively little freedom when it comes to choosing their routes (since the will usually choose the fastest route), and the delivering of meals is a core activity of Deliveroo (which may indicate a relationship of authority). Furthermore, Deliveroo has made repeated unilateral changes to the form of contract; first it was a contract of employment, then a contract for services, and then riders had to choose between Regular and Unlimited. An algorithm named ‘Frank’ is used to allocate the deliveries of meals. This algorithm continuously keeps track of the rider's GPS location, which is a drastic means of control. These circumstances also suggest a relationship of authority. The Court of Appeal also considered it relevant that a large number of the riders do not present themselves, both socially and to the Tax Administration, as ‘real’ entrepreneurs. All things considered, it is the opinion of the Court of Appeal that the riders are more likely to be in a relationship of authority than without one.
Other circumstances
The Court of Appeal also considered that on the basis of the legal presumption set out in Section 7:610a of the Dutch Civil Code – performing work during a period of more than 3 months and more than 20 hours per month – an employment contract is presumed to exist. Deliveroo has rebutted this presumption insufficiently. Besides, riders who fall ill due to an accident at work are awarded (limited) compensation, and Deliveroo offers riders a free liability insurance. These circumstances are indications of the existence of an employment contract. According to the Court of Appeal, the fact that the riders were working under a standard model agreement with ‘no employer's control’ of the Tax Administration (Algemene Modelovereenkomst ‘geen werkgeversgezag’) does not exclude that they have an employment contract.
Conclusion
Considering all circumstances, the Court of Appeal concluded that only the freedom allowed for the performance of the work is a circumstance that would suggest the absence of an employment contract. All other elements, including the way of paying wages, the control exercised, and the legal presumption, indicate the presence of an employment contract. Therefore, the Court of Appeal concluded that the Deliveroo riders are working on the basis of an employment contract.
What happens now?
This opinion of the Court of Appeal is very casuistic; in a different case, the outcome may very well turn out differently. Therefore, this judgment offers little clarity in practice. From a legal perspective, critical comments are possible about the involvement of (tax-related) entrepreneurship and the qualification of core activities in the considerations of the Court of Appeal. Meanwhile, we have learned that Deliveroo will take the matter to the Supreme Court. In all probability, the Supreme Court will also express an opinion on these issues. In the meantime, the employment contract is also high on the agenda for the Dutch parliamentary elections on 17 March 2021.
Feel free to contact Ruud Schepers of Eylard Fenema if you have any questions.
