The Court of Appeal has ruled that pizza delivery drivers engaged by Karshan (Midlands) Limited, trading as Domino’s Pizza, worked as self-employed contractors during the 2010 and 2011 tax years. A majority allowed the company’s appeal, set aside the High Court judgment and order and the Appeal Commissioner’s decision, and declared that the drivers worked under contracts for services.
The dispute concerned whether the drivers’ earnings were taxable as employment income under Schedule E or as self-employment income under Schedule D. The Appeal Commissioner had decided in 2018 that the drivers worked under contracts of service and their earnings were taxable under Schedule E. The High Court dismissed the company’s appeal by way of case stated in January 2020.
In the Court of Appeal, Costello J. found that the Commissioner had misapplied the mutuality of obligation test. She held that a contract of service requires reciprocal obligations to provide and perform work. Under the written agreement, Domino’s was not obliged to offer work, and drivers were not obliged to accept or attend rostered shifts. The drivers could choose when to make themselves available, while the company could decide whether to roster them. The court found no sanction for failing to attend; a manager might follow up, but the evidence did not establish that absence was a breach of contract.
The judgment said the Commissioner had treated the availability sheets and rosters as creating individual contracts with mutual obligations, without establishing that those arrangements imposed an obligation on drivers to work throughout a rostered period. Costello J. also found that the written agreement reflected the parties’ true agreement, apart from three departures identified by the Commissioner: no company vehicles were available for hire, the company prepared invoices for some drivers, and some drivers were asked to assemble boxes while waiting. The latter two departures applied to some drivers, and the court considered none of the three relevant to mutuality of obligation.
The Court of Appeal did not overturn the Commissioner’s conclusions on substitution or integration. It found there was evidence on which she could conclude that substitutions operated like shift-swapping, and that uniforms, vehicle logos and paid brand promotion integrated drivers into the business. Those findings did not decide employment status because the absence of mutuality was decisive.
The court’s ruling was by majority: Haughton J. agreed with Costello J.; Whelan J. dissented and would have dismissed the appeal. The court’s provisional view was that costs should follow the event, with the company entitled to costs of the appeal and High Court proceedings. A party could seek a short hearing on the form of the order or costs within ten days of the judgment’s issue.