Employment Law Update: Deliveroo and penalty clauses
Most people will have seen the Deliveroo vehicles around and about recently. They are a symbol of the modern economy in that they allow for a fast and flexible way of providing food to customers. This flexibility has not however been reflected in notable warranties and indemnities that have been placed into the contracts of Deliveroo workers. There is warranty in their staff contracts which, in essence prevents their workers from presenting a claim to the Employment Tribunal, and an indemnity that enforces that if they go against this they would have to pay the company’s costs.
It has been reported that one clause in the contract 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,” and another clause states that those who do take action must “Indemnify and keep indemnified Deliveroo against costs (including legal costs) and expenses that it incurs.”
To put this in context a worker who is, for example, sexually harassed or racially abused by their boss might be prevented from pursuing a claim related to this wrongdoing. Given the twin barriers presented by the initial complete bar on pursuing a claim and the follow up onus of paying for the company’s costs if they did wish to continue.
A clause such as this is likely to be deemed as unenforceable in that is highly restrictive, lacking reasonable commercial justification and thus likely to be considered a penalty clause. Penalty clauses in situations where there is unequal bargaining power- i.e. a large company and an individual Claimant- are generally likely to be struck down by the courts. A full indemnity- i.e. universally applicable regardless of whether the claim was successful or not- would likely be struck down as an unreasonable penalty clause. This is shown by case law such as Chaplair Ltd v Kumari [2015] EWCA Civ 798 (27 July 2015). There may be scope however for saying that a partial indemnity complying an employee to pay costs if they are not successful could be enforceable. However the distinct need for such a provision is debateable given that costs can already be awarded if the claim presented is vexatious and there is also a mechanism for invoking a deposit order- requiring the Claimant to pay a deposit to proceed with the claim. The need for additional burdens on a Claimant given the sheer cost of pursuing a claim post The Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 is far from clear.
Please contact Ashley Hunt and Carrie-Ann Randall on 01858 445480 or Vaishali Thakerar and Sejal Patel on 0116 212 1000 if you need advice on employment status or onerous contractual clauses.
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