Deliveroo’s legal legacy: a tale of two jurisdictions and the shifting sands of the Gig Economy

The Dutch Supreme Court (Hoge Raad der Nederlanden) upheld the two decisions of the Amsterdam Court of Appeal of 21 December 2021 in its two rulings of 24 November 2023 The Supreme Court followed the opinion of the Advocate General (AG) and confirmed that Deliveroo is covered by the universally binding collective labour agreement for “Professional freight forwarding”, and that Deliveroo is obliged to be affiliated to the industry-wide pension fund for professional road transport.

This impacts the entire sector, particularly gig-economy companies like Uber Eats and Getir, given that delivery rider roles are among the most rapidly expanding types of employment.

Deliveroo’s Dutch journey – the backstory

Since September 2015, Deliveroo has been operating a delivery service in the Netherlands, providing a digital platform where restaurants list meals for consumers to order. Deliveroo then arranged for the ordered meals to be delivered to customers by bicycle.

The meal delivery workers were initially employees, however, at the beginning of 2018, Deliveroo introduced a new business model in which the meal delivery companies, as independent freelancers, used the Deliveroo platform to find ‘trips’.

Deliveroo attempted to avoid the employment regime, as having a workforce on an assignment agreement is less costly, more flexible, and easier to dismiss. However, the Amsterdam District Court did not concur with this approach.

First judgement & implications

The initial legal action, initiated by the Federation of Dutch Trade Unions (FNV), sought a ruling to classify Deliveroo’s operations under the Collective Labour Agreement for Professional Goods Transport.

After an extensive analysis of the facts, the Amsterdam district court concludes on 15 January 2019 that, despite the changed contractual form that was introduced by Deliveroo in 2018, the legal relationship between Deliveroo and meal delivery companies – in fact the meal deliverers – has not changed substantially and that these deliverers are still working on the basis of employment contracts.

Therefore, Deliveroo’s meal deliverers are considered employees, and Deliveroo is a transport company subject to the Collective Labour Agreement for Professional Goods Transport. This judgment had significant consequences.

Being employed offers the meal deliverers a mandatory great deal of protection: minimum wages, payment during illness (for the duration of 104 weeks!), payment during vacation and protection against dismissal amongst many other benefits.
These benefits all have to be paid by the employer, Deliveroo!

As the district court decided that Deliveroo employees fall under the Collective Labour Agreement “Professional freight forwarding” it instantly meant that all of Deliveroo’s employees fall under the compulsory industry-wide pension funds (BedrijfsPensioenFonds) Professional road transportation (BPF).

Second judgement & financial consequences

After the initial judgment, the BPF (Pension Fund for Transport) began a new legal process to determine whether Deliveroo, or at least a part of it, should be included under the mandatory participation in the Pension Fund for Transport. This would mean Deliveroo is legally required to contribute to the Pension Fund for Transport.

BPF sought back payment of pension contributions and had to legally pursue Deliveroo to obtain these payments.

The district court agreed with one of the Pension Fund’s arguments, which was that new ventures not explicitly defined as road transport could still fall under this category if their primary activity involves physically moving items from one location to another. This naturally includes Deliveroo’s service of delivering food from restaurants to customers, using any form of road, including bicycle paths that are common in the Netherlands.

On 26 August 2019 the Amsterdam District Court issued a ruling requiring Deliveroo to pay €638,972 to the BPF in overdue pension premiums for approximately 1,900 delivery personnel on their payroll. This decision came about because the BPF successfully persuaded the court that Deliveroo’s primary business is delivering meals from restaurants, rather than just facilitating and boosting orders through a platform. The court recognized that Deliveroo’s operations, including its ordering process, digital framework, and marketing efforts, are fundamentally aimed at achieving their primary objective: meal delivery.

The compulsory industry-wide pension funds (BPFs) can be a game changer if they are not taken into account when insuring employees as in The Netherlands around 65 mandatory BPFs are active on labour market and all are eager to protect pensions of the employees who fall under their regime.
Employers should really check upfront all labour law aspects, such as whether or not a BPF is applicable, not only the economic model.

Appeal by Deliveroo

Deliveroo appealed to overturn both judgements, however without the desired result.

The Court of Appeal assessed the circumstances of the case leading to the ruling that the delivery drivers had an employment contract with Deliveroo, even though Deliveroo called it ‘assignment agreements’ and therefore the Collective Labour Agreement was applicable.

On the same day the second appeal was decided upon as well. Also in this case the Court of Appeal has confirmed the district court ruling that Deliveroo is covered by the obligation decree of the Professional Road Transport Pension Fund.

Supreme Court proceedings

Despite losing four cases, Deliveroo refused to concede and escalated the matter to the Supreme Court, challenging the previous decisions.

Deliveroo requested the Supreme Court to reverse the rulings of the lower courts. In the case concerning the collective labour agreement (the initial procedure), Deliveroo criticized the Court of Appeal’s decision that classified it under the professional goods transport agreement. Deliveroo contested this, arguing that the Court of Appeal overlooked its claim that the declarations making the collective labour agreement universally binding were invalid.

The Supreme Court, however, affirmed the Court of Appeal’s judgment that Deliveroo’s delivery drivers were indeed employees, despite Deliveroo’s argument to the contrary. Deliveroo had argued that the drivers had the freedom to choose their rides and the option to be replaced, suggesting they were not regular employees.

Regarding the delivery drivers’ autonomy over their work schedules and the option for substitution, the Supreme Court noted that these facts could suggest the absence of employment contracts. However, the court was justified in its decision, based on other case specifics, that these still constituted employment contracts. It was found that the practical significance of the substitution possibility for the delivery drivers was minimal.

The existence of an employment contract, according to the Supreme Court, depends on all the circumstances of the case, which the court appeal assessed correctly.

Cassation Appeals in the Pension Case

Deliveroo’s appeals in the pension matter primarily contested the Court of Appeal’s interpretation of ‘transport of goods by road’ in the mandatory decree and the ‘principality requirement’ within it. Additionally, Deliveroo claimed the Court of Appeal did not recognize that the mandatory decision was invalid.

The Supreme Court concluded that delivering meals by bicycle is covered under ‘transport of goods by road’ as specified in the mandatory decree for the sectoral pension fund for professional road transport. The description does not imply that transport must be done using a specific vehicle type. Also, the term ‘transport’ does not inherently refer to a specific mode of transport. The Supreme Court determined that Deliveroo’s arguments did not warrant a different interpretation.

In these two cases, judged by the Supreme Court on November 24, 2023, it was determined that Deliveroo is subject to the collective labour agreement for professional goods transport and falls under the mandatory decision of the industry-wide pension fund for professional road transport.

Implications for other Gig-Economy Companies

The Supreme Court’s rulings solidify the decisions of the District Court and the Court of Appeal. According to these decisions, Deliveroo must retroactively apply the universally binding provisions of the Collective Labour Agreement for Professional Goods Transport to its employees since 2015. Furthermore, Deliveroo is also obligated to pay €638,972 in overdue pension premiums for approximately 1,900 delivery personnel on their payroll.

Of course, in principle, each ruling only applies to a specific case and depends on all the circumstances of the case, but this is an important ruling by the highest Dutch court that also affects all other gig-economy companies, such as Uber Eats!

These decisions are set to significantly impact gig-economy companies like Uber Eats and Getir, which provide similar services to Deliveroo, employing self-employed riders in the same manner.

It seems inevitable that, following the Deliveroo rulings, these gig-economy firms will also soon be contributing premiums to the BPF’s pension fund.

Deliveroo’s UK journey

Just 3 days prior to the Dutch Supreme Court rulings, the United Kingdom Supreme Court ruled unanimously that Deliveroo riders are in fact self-employed. The basis for this ruling lies in the fact that the riders have the right to be replaced, as stated in the substitution clause of their agreement with Deliveroo and therefore have no right to collective bargaining.

The UK supreme court upheld the court of appeal judgement in which it was determined that Deliveroo riders should be deemed self-employed as the riders were not “workers” within the meaning of the 1992 Act because the terms under which they provide their services did not require them to do so personally but permitted the use of substitutes.
Moreover, according to Lord Justice Underhill an indicator of an employment relationship lies in the fact that the work “must be carried out personally by the worker”.
The UK supreme court decided that the riders therefore were correctly described as self-employed.

The difference between the two jurisdictions could not be more obvious: In the Netherlands the existence of an employment contract depends on all the circumstances of the case, not only on a single clause, being the right of substitution and in the UK by law, anyone with the right to be replaced is classed as self-employed.

The case in the UK was brought up by Independent Workers Union of Great Britain (IWGB), the UK equivalent of FNV.
IWGB had tried to represent a group of Deliveroo riders in order to negotiate pay and conditions with the company, but all their efforts have been futile. In order to be eligible for representation by the IWGB the riders have to be in an employment relationship with Deliveroo. This, according to the rulings is not the case and IWGB could not represent the riders as they are self-employed.

Jurisdiction matters!

The Dutch and UK rulings show once again that similar scenarios can have vastly different outcomes in different jurisdictions.

Entrepreneurs planning to expand internationally must be mindful of the variances in legal frameworks and regulations across borders. A lack of preparation for international expansion can lead to costly setbacks rather than successful growth.
Allow the experts at ACG International to assist you in navigating this process, as we have successfully done for numerous others.

ACG International is here for you

ACG International goes beyond a conventional team of lawyers.
While our law firm consists of highly experienced lawyers, under the expert leadership of Edith Nordmann, ACG International’s Managing Partner, we also offer all our clients unique access to a wider network of professionals. We work together with lawyers from all over the world, specialising in different areas of law, legal systems and jurisdictions, which allows us to help our clients in the most effective way when they need an excellent and reliable lawyer in another country quickly.
This enables us to provide, both in the Netherlands and internationally, the personal and prompt service our clients need.

Reach out to us for an initial consultation prior to signing any contracts. This way, you can directly learn how we can assist you and prevent expensive errors before your international venture even starts.

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