After the District Court and the Court of Appeal had previously answered in the affirmative the question of whether Deliveroo delivery drivers in the Netherlands work under employment contracts, an affirmative answer also followed form the Supreme Court on 24 March 2023. Deliveroo’s delivery drivers are therefore not self-employed workers, but employees working on the basis of an employment contract. It is explained in this article how the Supreme Court arrived at this judgment and what it will mean in practice with regard to the question of whether or not an employment contract exists (the “qualification question”).

Qualification question

When the question arises whether an agreement qualifies as an employment contract (the “qualification question”), Article 7:610 of the Dutch Civil Code is central to that assessment. According to that article of the law, an agreement qualifies as an employment contract if it contains the following elements: (i) labour, (ii) wages and (iii) authority. The parties’ intention – as the Supreme Court taught us in November 2020 – is irrelevant in answering this qualification question. The decisive question is how the parties have implemented the agreement and whether the rights and obligations agreed between the parties meet the requirements for the existence of an employment contract. In sum: if these three elements are present in practice in a situation in which the parties did not intend to enter into an employment contract, an employment contract nevertheless exists. The qualification question has given rise to several court cases among technology companies that conduct their activities via a platform: against Helpling, Temper, Uber and now also Deliveroo, among others. Whereas the element of ‘wages’ is relatively easy to assess, the interpretation of the ‘labour’ and ‘authority’ elements is mostly at issue in practice – and also in this Deliveroo case. What did the Supreme Court say about this in its judgment?

Supreme Court

The Supreme Court found that all the elements of an employment contract are present and that Deliveroo’s delivery drivers qualify as employees. In doing so, the Supreme Court reiterated that the answer to the question whether an agreement should be considered an employment contract depends on “all the circumstances of the case considered jointly”.

Specifically with regard to the elements of ‘labour’ and ‘authority’, the Supreme Court gave further relevant considerations for the field. With regard to the ‘labour’ element, the Supreme Court found that the fact that the delivery drivers had a large degree of freedom to log into the Login system and that it was contractually permissible for delivery drivers to arrange for replacements did imply a level of freedom in the performance of the work, but not of such a nature as to be incompatible with the qualification of the agreement as an employment contract. Some degree of freedom to perform the work therefore need not preclude the qualification of an employment contract. Again, this must be viewed in the light of all the circumstances of the case. With regard to the ‘authority’ element, the Supreme Court found that it follows from its case law that the performance of ordinary company work may suggest a relationship of authority. If the work and the person performing the work are embedded in the organisation and the business operations, that may therefore point towards the existence of an employment contract.

Although many may have hoped otherwise, the Supreme Court saw no reason for further legal development of the qualification question. According to the Supreme Court, this issue already has the attention of Dutch and European legislatures and, in other words, the ball is now in their court.

Conclusion

The Deliveroo judgment demonstrates that answering the question of whether an employment contract exists still involves weighing up all the circumstances of the case. The fact that work is performed that is embedded in the organisation and concerns a core activity of the organisation may point towards the existence of an employment contract. For the time being, however, this is still only one circumstance that should be taken into account in the holistic approach to all the circumstances of the case. The Supreme Court sees no reason for further legal development on this point at present. It is now up to the Dutch and European legislatures to set further rules regarding the qualification question.

If you are unsure of the qualification of the self-employed workers you hire, this judgment underlines the importance of critically examining that issue. If the self-employed workers engaged by you qualify as employees, that could cost you dearly (in light of the protection against dismissal and the financial rights to which an employee is entitled). We will be happy to look into this matter with you if you so wish.

Please contact our employment law specialists if you have any further questions on this subject.

This article was published in the Newsletter Vestius of April 2023