The claimants entered into franchise agreements with the respondent, which focused on parcel delivery and collection services.  The claimants largely undertook work in relation to deliveries.  The issue arising before the Tribunal and the EAT here was the status of the claimants.  

The respondent engaged both of the claimants through franchise agreements.   This was a standard form agreement outlining that the franchisee’s would be running businesses albeit in line with the respondent’s operating manual. The agreement further outlined that it could be terminated for breach of conditions in the operating manual and that the franchisee had to supply the driver.  That driver could only start performing deliveries when the application form had been returned to the respondents and a letter of authorisation issued. 

The Tribunal outlined that the issue was whether the claimants were required to provide personal performance in relation to the franchise agreement.  The Tribunal found that the agreement represented the terms that both the claimant and the respondent had agreed to.  They further found that the agreement allowed for substitute drivers of the claimant’s choosing to undertake the work and that lead to them being regarded as independent contractors rather than employees or workers.  The claimants argued that the right of substitution was not unfettered considering that the operating manual placed requirements on those who could undertake the work. 

The EAT examined the decision of the Tribunal and found that the correct approach had been taken when it came to the substitute drivers.    It was held that the need for approval did not detract from the terms of the franchise agreement which were in place.  The EAT found that the operating manual did not have contractual status nor was it incorporated into the franchise agreement.   This was despite the fact that the operating manual did outline that a failure to comply could lead to termination of the franchise agreement.   As a result, it was found that the right to substitute was not, in fact, fettered.  It was in line with the decision in Pimlico Plumbers v Smith in that any substitute must be shown to be as qualified as the contractor.  Accordingly, the decision of the Tribunal was upheld in that the claimants were independent contractors. 

Practical Lessons

Once again, the distinction between independent contractor, worker and employee continues to cause difficulties for individuals and the Tribunal.  This decision focuses on the need for an unfettered right to substitute.  It was held that this was in place considering that the claimants could substitute their work to others insofar as they demonstrated that they were qualified to do so as was outlined in the operating manual.   This means that there can be some limitations, albeit very narrow, which will still retain the right to substitute in line with that expected of an independent contractor rather than worker or employee.  
https://assets.publishing.service.gov.uk/media/61c1c474e90e07196d2b8335/_1__Mr_M_Stojsavljevic__2__Mr_T_Turner_v_DPD_Group_UK_Ltd_EA-2019-000259-JOJ__previously_UKEAT0118_20_JOJ_.pdf