In this case, the EAT agreed with an employment tribunal that the substitution clause contained in drivers' contracts was not genuine and they were workers rather than self-employed.
Facts
BCA Logistics Limited (BCA) engaged over 400 drivers on a ‘self-employed’ basis to undertake vehicle collection, inspection, delivery and transport services for its customers. The standard-form contract they signed contained a clause allowing them to send a substitute to do their work. An employment tribunal had to decide whether the drivers were in fact workers with associated working time and national minimum wage rights. To be a worker, the individual must be under an obligation to provide personal service. In asserting worker status, the drivers challenged whether the substitution clause in their contracts was genuine.
The employment tribunal agreed with the drivers, finding that the substitution clause was not genuine. They said: “not only was a substitute never used but nobody seriously expected a substitute to be used. The substitution clause was an unrealistic possibility that was not intended to be operated in practice, and it therefore did not form part of the true agreement. It did not reflect what the parties realistically expected to occur."
BCA appealed unsuccessfully to the EAT. Key to the decision was that:
- It was not in dispute that an employment tribunal can take into account evidence of whether and how far the drivers had, in practice, enquired about substitution, how BCA had responded to any such enquiries, whether BCA had made any arrangements to deal with substitution, how far it would have been practicable for substitution to take place, and whether, in reality, BCA would have been willing to accept the risks inherent in substitution in the circumstances of its business
- No driver had used a substitute in over 25 years
- There was no training or guidance for drivers on how to engage and use a substitute
- There was no plan or process to deal with the practical problems that would arise if the drivers used a substitute
- There was no training offered to substitutes, whereas BCA's drivers were required to do a four-day training course
- It was unrealistic to think that substitutes could do inspections, or that BCA’s customers would be content for a potentially untrained substitute to do this work
- It was unrealistic to suggest that BCA would risk handing over high-value customer vehicles to unknown, untrained substitutes
- The drivers' evidence was more credible than that of BCA
What does this mean for employers?
This case reminds employers that if an individual challenges a substitution clause the employment tribunal will look at what occurs in practice when assessing worker status. This case cautions employers that to be effective substitution clauses need to be practicable. This is a balancing act. In this case it was not in dispute that an unfettered right to substitution meant that a contractor was not a worker. However, as explained above, given the specialist skills and training required of the contractors in this case, the lack of any conditions on the right to substitution led the EAT to find that the substitution clause was not genuine. Therefore, where specialist skills and training are required, setting out in the clause that any substitute must be suitably qualified will be important. That said, the more conditions a substitution clause has, the more it is open to the challenge that it requires the personal service of the individual – thereby conferring worker rights. The drafting of such clauses will therefore involve a careful balancing act.
