Deliveroo France sentenced for undeclared work: a step towards reconsideration of the delivery platform business model ?
Jacques Perotto, Quentin Kéraval and Eloïse Ramos
After the social law chamber of the French supreme court (Cass. soc., 4 March 2020, n°19-13.316) recharacterized the service provision contracts of “UBER drivers” as employment contracts, the Paris Criminal Court sentenced Deliveroo France to pay a 375,000 euro fine for the offence of undeclared work, as well as some of its former directors to suspended prison sentences.
The company was accused of having “not declared a large number of jobs by intentionally failing to make pre-employment declarations and to issue pay slips, in this case, by using thousands of workers under a supposedly independent status via commercial contracts, while these workers were placed in a permanent legal subordinate relationship to the company (…)“.
The reasoning of the criminal court is in two steps:
Firstly, it denied Deliveroo the application of the presumption of self-employed status instituted by the legislation for the benefit of “electronic contact platforms”.
Such platforms are defined by the General Tax Code (Article 242 bis) as companies that “put people at a distance in contact with each other, by electronic means, in order to sell a good, provide a service or exchange or share a good or a service”.
For this presumption to apply, the criminal judge considers that it is necessary for the platform’s activity to be limited solely to putting people in contact with each other, with the latter (i) selling goods or services themselves and (ii) conducting the related transaction between themselves.
In the Deliveroo case, the company’s articles of association provided for “the delivery, directly or indirectly through third party service providers, of any product related to its corporate purpose, in particular any food product, ready-made meals, drinks, without manufacture by the Company”.
In fact, the Court considered that the Company did not limit itself to putting the restaurant owner and the consumer in contact with each other, as it is supposed to do under the terms of Article 242 bis of the CGI, in order to benefit from the presumption; it noted that:
- The restaurant owner and the consumer never came into direct contact;
- The orders were placed directly from the Deliveroo application;
- Deliveroo France, through its delivery drivers, took charge of the order and delivered it to the consumer.
The Court concluded that Deliveroo France was “a service platform” whose activity went far beyond simply “putting people in touch with each other” and which, consequently, could not benefit from the said presumption.
In a second step, the court carried out a classic assessment of the criteria of employment in order to characterise the existence of a subordinate relationship:
- Training provided by Deliveroo: in order to assess their skills, the “rider candidates” were required to undergo theoretical and practical training before starting their service, formalised by a precise analysis grid provided and supervised by Deliveroo France;
- The company’s involvement in the organisation of the riders’ work: the delivery processes were clearly defined by Deliveroo France, with no room for manoeuvre for the rider, who could not decide how to carry out his activity;
- Imposed dress code: the wearing of a branded outfit was made compulsory;
- Absence management: delivery personnel were subject to a system of compulsory connections with prior validation, preventing them from freely choosing the days, times and place of work;
- Invoicing: this was centralised within Deliveroo for all of its delivery drivers, just like the employer who draws up the pay slips for his employees;
- Monitoring of the activity of the riders: the geolocation system gave Deliveroo a real power of control over the activity of the riders, with refusals to take the job having an impact on the possibility of signing up for certain time slots, for example;
- Pricing: impossible for the riders to freely negotiate their prices, as these were decided unilaterally by Deliveroo;
- Exercise of disciplinary power: absenteeism sanctioned by withholding of fees or downgrading in the shifts; or even termination of the commercial relationship.
In practice, delivery riders who made a large number of deliveries and had low absenteeism were favoured in terms of their ranking, to the detriment of the others (indirectly punished for their low attendance), by a priority on the choice of days and time slots worked (weekends being the most lucrative and therefore the most prized).
On the basis of this “bundle of evidence”, the Paris Criminal Court considered, in order to characterise the offence of undeclared work, that (i) the delivery riders should be considered as employees and that (ii) it was intentionally that Deliveroo France had disregarded its obligations to declare and to draw up payslips.
Where do we go from here?
Two conclusions can be drawn:
(i) Litigation related to the reclassification of a contract for the provision of services as a contract of employment can take place in three stages:
- In the criminal sphere via the recognition of a situation of undeclared work.
Once the criminal offence has been established:
- URSSAF litigation before the judicial court: the recognition of a legal subordination link results in the reinstatement of all the sums paid in the scope of social security contributions.
- Then, labour court action to obtain severance pay, compensation for notice, compensation for unfair dismissal, back pay for the last three years (in particular non-compliance with the minimum collective agreement, overtime, additional pay for Sunday work) and claims for damages (non-compliance with maximum daily and weekly working hours, non-compliance with break/rest times, prejudice linked to retirement, lack of training, etc.).
(ii) This decision could clearly jeopardise this type of business model, apparently widely shared by Deliveroo’s competitors…
Jacques Perotto, Partner and Quentin Kéraval and Eloïse Ramos, Associates.