On 24 March 2023, the Supreme Court delivered a long-awaited ruling on the employment status of Deliveroo riders, upholding an earlier decision by the Amsterdam Court of Appeal that Deliveroo riders qualify as employees. In its ruling, the Supreme Court emphasises that all circumstances should be weighed in the assessment of whether an employment agreement exists. Although the riders had a certain freedom to work whenever they wanted and to be replaced by someone else, which are typically elements of a contract for services, all other circumstances lead to the conclusion that the riders were in fact employees. The Supreme Court ruled that the Court of Appeal rightly and not incomprehensibly attached minor importance to the riders having the possibility to have someone replace them, as in practice they only did so occasionally.

The Supreme Court refrains from formulating new general rules for assessing if a worker is self-employed or an employee, as legislation on this topic is currently in the making, at both the national and the European level.

Background

Deliveroo operates a digital platform linking independent restaurants to customers via an ordering and payment system. Deliveroo riders deliver meals to customers by using an app on their phone to receive the orders and locations of restaurants and customers. When starting its activities in the Netherlands in 2015, Deliveroo riders worked on the basis of temporary employment agreements, but from 2018, Deliveroo only entered into agreements for services and treated its riders as self-employed workers. Deliveroo terminated its activities in the Netherlands in late 2022.

In 2018, the trade union FNV filed a mass claim, stating that the Deliveroo riders are employees and as such entitled to employee rights like sickness pay and protection against dismissal. FNV invoked article 7:610 DCC, a provision of mandatory law that qualifies a relationship as employment if three criteria are met: work, wages and control – the latter also known as a "relationship of authority". FNV argued that as all three criteria for employment were met in the relationship between Deliveroo and the riders, the court should look beyond the "'self-employed worker construction" Deliveroo had set up on paper.

Both the sub-district court and the court of appeal in this case ruled that FNV's claim was admissible, and that the contracts between Deliveroo and the riders did indeed qualify as employment agreements, as the "'work", "wages" and "control" criteria had been met. The fact that the riders formally worked on the basis of contracts for services did not change this view.

In its appeal to the Supreme Court, Deliveroo challenged the admissibility of FNV's claim and the court of appeal's ruling that the riders are employees.

The Advocate General's opinion

In June 2022, Advocate General De Bock issued a 125-page advisory opinion outlining the context of this type of platform-based work and the issue of qualifying it. The AG makes a plea for setting a new standard to assess the element of "control" by the employer. In her view, the main question should be whether the work is "organisationally embedded" in the company. This boils down to assessing if the work carried out by the workers in question forms part of the company's core activities. If so, the work is organisationally embedded in the business and the "control" test is met. The outcome is different where the workers can be regarded as independent contractors running their own business. This must be determined based on how the work is actually carried out, in line with case law of the Court of Justice of the European Union.

Furthermore, the AG argues that the obligation to personally carry out the activities is not an element of "work" within the meaning of article 7:610 DCC. The fact that the riders were allowed to have someone replace them does not stand in the way of qualifying the relationship with Deliveroo as an employment agreement. The same applied to the riders' freedom to work whenever they wanted. Finally, the position of workers at the bottom of the labour market is important when considering whether they have negotiated rights and obligations or whether these have been unilaterally determined by the work provider.

The Supreme Court's ruling

The Supreme Court upheld the earlier decision by the Amsterdam Court of Appeal, which had ruled that the Deliveroo riders qualify as employees and are therefore retroactively entitled to certain employee rights. In line with earlier case law (Groen/Schoevers and X/Gemeente Amsterdam), the Supreme Court confirmed that the qualification of an agreement as an employment consists of two phases. First, the rights and obligations the parties have agreed on must be established on the basis of the "Haviltex" standard, taking into account all relevant facts and circumstances, including whether the parties intended to conclude an employment agreement. Second, it must be determined whether the agreement meets the legal requirements for qualifying as an employment agreement: (i) wages, (ii) work carried out for another party (iii) under the authority of the other party (iv) during a certain period. For this second phase, whether the parties intended to conclude an employment agreement, is irrelevant.

The Supreme Court subsequently made clear that "all circumstances" of a case should be considered when assessing if an employment agreement exists. In underlining that "all circumstances" are relevant, the Supreme Court included:

• the nature and duration of the work;
• how the work and working hours are determined;
• the embedding of the work and of the person performing the activities in the organisation;
• how the business where the work is performed is operated;
• whether or not there is an obligation to personally perform the work;
• how the contractual arrangements between the parties have been created;
• how the remuneration is determined and paid;
• the amount of remuneration;
• whether the person performing the work runs a commercial risk;
• if the person performing the work is acting or is able to act as an entrepreneur when participating in economic activities;
• the importance of certain contractual clauses, depending on whether the clause has actual significance for the person performing the work.

The Supreme Court further briefly addressed the question of formulating new general rules on what qualifies as an employment agreement, such as using the organisational embedding of the work in the company's activities as the primary test (as AG De Bock had advocated in her advisory opinion), and introducing a legal presumption for the existence of an employment agreement. As both the Dutch and the European legislatures are currently engaged with this topic, the Supreme Court explicitly refrained from developing this matter any further. The ball is in the court of the various legislatures.

In response to specific arguments raised on appeal, the Supreme Court ruled that the riders' freedom to decide whether or not to work, and their ability to have someone replace them, were circumstances leaning towards a contract for services, although not incompatible with an employment agreement. According to the Supreme Court, an important factor is which set of rules applies when someone does decide to go to work, for how long and how frequently. Although the riders' contract with Deliveroo included the possibility of being replaced by another rider, the Court of Appeal looked at this issue and found that this only happened occasionally and this clause therefore had little actual significance. All other circumstances, including payment of wages, the relationship of authority and working during a certain period of time, indicate that an employment agreement existed, according to the Supreme Court. This meant that, in light of all circumstances of this case, the Court of Appeal rightly and not incomprehensibly ruled that the legal relationship of the Deliveroo riders qualifies as an employment agreement.

The Supreme Court did not rule on the merits of Deliveroo's claim that FNV's mass claim was inadmissible. This means that a trade union can act as party in mass claim proceedings, without individual employees having to be parties in those proceedings.

Practical implications

This outcome clarifies that qualifying a relationship as employment still requires a holistic approach whereby all relevant facts and circumstances should be taken into account. In line with earlier case law, the Supreme Court underlined the importance of the actual activities carried out by the worker as opposed to what sort of formal contract was entered into by the parties. Even if an agreement contains certain provisions typical of a contract for services, the agreement as a whole can still be regarded as an employment agreement, based on other circumstances. It is up to the legislature to make any amendments to article 7:610 DCC regarding what qualifies as employment.

Stefan Sagel and Irina Timp of De Brauw's employment team litigated this case before the Supreme Court on behalf of FNV.