Scare tactics: when is a contract unenforceable in employment law?

A restaurant delivery firm, Deliveroo, has reportedly tried to prevent its couriers from raising employment tribunal proceedings against it and obliging them to pay all legal costs if they do. But is this enforceable?

The company has issued contracts to their self-employed couriers, which include a clause stating that they must not take the company to an Employment Tribunal to attempt to gain recognition as an employee or worker. The couriers require the right to work in the UK, a bike or scooter and a suitable phone for using the app to be able to become self-employed workers for Deliveroo.

According to various sources, the clause in the contracts reads: “You further warrant that neither you nor anyone acting on your behalf will present any claim in the employment tribunal or any civil court in which it is contended that you are either an employee or a worker.”

A further clause allegedly warrants that the courier shall keep Deliveroo indemnified against costs (including legal costs) and expenses that it incurs from them pursuing any legal action to this end. There has been suggestion that these clauses are solely intended to scare the couriers against taking any action to gain employment law rights.

Deliveroo maintain that their advisers have assured them that this is legal. However, critics have argued that this is unlikely to be enforceable – the clauses expected to be regarded by a court or tribunal as penalty clauses and therefore without commercial justification.

If this sounds familiar, it is because there is strong comparison to the landmark test case currently being litigated in the London Tribunal against Uber.

Going forward, best practice for businesses drawing up any new contract is to seek legal advice from a solicitor. It is also worth bearing in mind the differences between Scots law and that of England and Wales. Jurisdiction and governing law clauses are highly significant should any matter be raised in a Sheriff Court or the Court of Session as opposed to an Employment Tribunal.

If you would like to know more about:

• Contracts;
• Jurisdiction clauses; or
• Any other employment law matter

Please contact catriona.sutherland@macandmac.co.uk.

July 28, 2016