The substitution clause and worker status
12 December 2019
In the case of Stuart Delivery Ltd v Augustine, the Employment Appeal Tribunal (EAT) ruled that a 'substitution clause' (which was found not to fit the definition of a substitution clause) held within an individual’s contract did not mean that they would not be classified as a ‘worker’ for employment status purposes in this particular scenario.
In this example, Augustine was employed as a delivery courier for Stuart Delivery Ltd. (SDL) and had to work fixed hour ‘slots’ for the company, in which he was required to remain stationed in an area that he had agreed to cover. During this ‘slot’, he would need to fulfil any deliveries that were offered to him and he would be paid a defined hourly wage for this service.
The majority of ‘slots’ lasted for a duration of three hours and during this time, Augustine was prevented from offering his services to any other delivery companies. He was, however, allowed to offer the ‘slot’ to a selection of couriers via SDL’s 'Staffomatic’ app once he had committed to it, should he change his mind about fulfilling that ‘slot’.
A tribunal previously held that this arrangement did not constitute a substation clause as Augustine would only be released from the ‘slot’ should another courier confirm that they would fulfil it instead. Therefore, Augustine had no control over whether or not somebody would undertake the ‘slot’ in his place and had no opportunity to pick who that specific substitute would be. This would not be deemed as a substitution clause and so would not exclude Augustine from being classified as a ‘limb (b) worker’.
The EAT upheld this determination and also agreed with the tribunal that Augustine was not in business on his own account and that SDL was not a customer of his delivery business.
CIPP comment
The CIPP understands that the task of assigning the correct employment status to staff can be daunting and complex, particularly as there seem to be so many tribunals that relate to the subject at present. Incorrect status determination can leave companies facing large fines and suffering a substantial hit to their reputation.
We offer a half-day training course which includes a section on how to assess employment status, along with plenty of information surrounding the hot topic of IR35. The next session will take place on 13 Jan 2020 in Bristol.
Enrol today to ensure that you are compliant with legislation and to avoid any potential penalties associated with incorrect employment status determination.
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