Individuals can usually only have worker status under employment legislation where they are under an obligation to provide their services personally. If they have a contractual right to provide a substitute to perform their services (known as a substitution clause), a tribunal is likely to rule that they are self-employed. However, as the recent case of BCA Logistics Ltd v Parker illustrates, worker status may still be established if there is evidence that the substitution clause is not genuine or is unworkable in practice.
BCA Logistics employed drivers on a self-employed basis to undertake vehicle collection, inspection, delivery and transport services for its customers in the automotive trade, including manufacturers, leasing companies and dealerships. Drivers worked under a standard form contract which allowed them to provide a substitute contractor to undertake these services. The substitution clause stated that drivers were responsible for negotiating and paying a fee to the substitute and for ensuring that the substitute complied with BCA’s driving licence and insurance requirements.
Over 400 drivers brought claims against BCA alleging that they were workers, not self-employed, and therefore entitled to be paid the national minimum wage and holiday pay. Around 600 more drivers have since brought similar claims.
The Employment Tribunal held that the drivers were workers. Crucial to this decision was its finding that the substitution clause did not reflect what the parties realistically expected to occur and was never intended to be used in practice.
BCA’s appealed the decision at the Employment Appeal Tribunal (EAT) but was unsuccessful. The EAT noted that the Tribunal’s finding had been based on several key factors:
• In 25 years, no driver had ever used a substitute.
• BCA did not provide any training or guidance for drivers on how to engage and use a substitute.
• No process existed to deal with the practical problems that would arise if a substitute was engaged, such as insurance, trade number plates, data protection and ID badges.
• No training was offered to substitutes, whereas BCA’s drivers were required to attend a four day training course.
• It was unlikely that an untrained and unknown substitute would be acceptable to BCA’s customers, particularly given that this work involved high value vehicles.
• The drivers’ evidence on the issue of substitution was more credible than that of BCA.
Dismissing BCA’s appeal, the EAT held that the Tribunal’s decision had been thorough and well-reasoned. It was also consistent with established case law which requires Tribunals to consider whether a substitution clause is genuine and reflects the true intentions of the parties.
This case is a reminder to check substitution clauses in individual and standard form contracts with consultants and contractors to ensure they are realistic in practice. An unfettered contractual right to provide a substitute will normally negate worker status, unless there is evidence that the clause lacks true intention or is unworkable. Although any conditions relating to substitutes should be kept to a minimum, it is also important to clarify any applicable procedures and requirements, such as specialist skills and training or security processes. This can be a difficult balancing act which requires careful drafting to minimise the risk of employment status claims.
