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The Employment Appeal Tribunal (EAT) has held in Stojsavljevic and another v DPD Group UK Ltd that individual owner driver franchisees (ODFs) who provided delivery services to DPD were neither employees nor workers.

The drivers entered into franchise agreements with DPD to operate parcel delivery services. DPD argued that they were independent contractors. The issue for determination was whether the ODFs had an unfettered right of substitution. Under the franchise agreement the ODF had to supply a driver (who could be the ODF himself or another person) to perform the services. A non-contractual operating manual stipulated that the ODF had to supply a copy of the driving licence of any proposed driver and complete an application form, in order for DPD to authorise that driver.

The EAT found that, although in practice the claimants had only used cover drivers who were also ODFs, or drivers or other ODFs, that did not detract from their broad contractual right to use any substitute of their choice at any time. There was no difference in DPD's approach to corporate and individual franchisees, with several of the ODFs being limited companies, operating multiple routes with multiple drivers.

It was implicit that DPD was entitled to be satisfied that a proposed driver fell within the contractual definition of "driver", namely that they were qualified, had an appropriate driving licence, were 21 or over and had undergone relevant training. DPD had no broader right to refuse any substitute. There was no fetter on the right of substitution and so this was inconsistent with personal performance. The claimants had a genuine right of substitution which was inconsistent with employee and worker status.

Take note: The right of substitution is often an important element when it comes to determining employee or worker status, and the decision in Stojsavljevic is a useful reminder that where a substitution right is limited only by the need to show that the substitute is as qualified as the contractor this will generally be inconsistent with personal performance.

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