DPD Owner-Driver Franchisees are neither Employees nor Workers

In the case of Stojsavljevic and another v DPD Group UK Ltd, the Employment Appeal Tribunal upheld a decision that individual owner-driver franchisees who provided DPD delivery services were neither employees nor workers.

The owner-drivers had entered into Franchise Agreements with DPD to deliver and collect their parcels.

The agreements had the following terms:

• the DPD owner-driver had to supply a driver (this could either be the owner-driver themselves or another employee, agent or subcontractor of the franchisee)
• the driver had to be over 21
• the driver had to hold a current driving licence
• the driver must have undergone the appropriate training
• the driver had to be authorised by DPD.

The owner-drivers contended that they were contracted to DPD as individual drivers and so were employees or at least workers (therefore providing them with certain employment protections).

DPD disputed this asserting that the owner-drivers were independent contractors (and so, self-employed).

The Appeal of DPD Drivers

The main issue, in this case, was the issue of ‘personal service’. If the DPD owner-drivers were required to perform the services personally and could not send a substitute or could only send a substitute in very limited circumstances, this would point towards at least worker status.

The original Employment Tribunal had held that the owner-drivers had an “unfettered right” to send a substitute in their place if they were unable to do the work themselves.

The owner-drivers argued that the substitute had to satisfy the conditions listed above and so their ability to send a substitute was somewhat compromised (as they could not just send anyone).

Employment Tribunal findings

The EAT found that the Franchise Agreement reflected the true agreement between the parties and that DPD was entitled to require “drivers” to satisfy the above requirements. It was found that DPD had no other rights to refuse the proposed substitute (if they satisfied the requirements).

The EAT held that a right to substitute that is only limited by the need to show that the substitute is qualified, is inconsistent with personal service. This meant that the owner-drivers did not have to carry out the work personally.

As a result, the owner-drivers had a genuine right of substitution and therefore were not workers or employees, but instead were self-employed contractors.

Issues when engaging people

This is the latest case in a long line of worker/employee/contractor cases considered by the Tribunal, with specific interest for franchisors and franchisees.

When determining whether someone is a worker, employee or self-employed contractor, the Tribunal will look at what the contract says, but also what the reality of the situation is.

In doing so, they can look behind the express terms of the contract, to consider personal service, control and mutuality of obligation (whether there is an obligation to offer work and for the individual to accept work), amongst other things.

When preparing franchise agreements, care should be taken to ascertain the role that the franchisee will have, particularly where the franchisee is the only individual working within the franchise.

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