Contractors IR35

Why the ‘Deliveroo’ argument in the Shanks case was a non-starter

Whereas the food delivery firm Deliveroo only had the ‘bad egg’ condition on its sub clause, the sheer number of…

Partner at Chartergates, Richard Crabtree has considerable employment law experience and has spent the last 26+ years advising on matters of employment law and representing clients in employment tribunals all across the UK. by Richard Crabtree
Tribunal judgement, gavel - Richard Crabtree on substitution in Shanks HMRC IR35 case vs Deliveroo and Pimlico Plumbers case law

Whereas the food delivery firm Deliveroo only had the ‘bad egg’ condition on its sub clause, the sheer number of conditions spoiled the Shanks case for invigilator body SQA. 

The employment tribunal case of invigilator Mrs J Shanks was underlined last week on the Kingsbridge Blog and with good reason as I will examine here, writes Richard Crabtree, of employment law firm Chartergates. 

‘Shanks’ (sort of) follows in Pimlico’s steps 

But the ‘Shanks’ ruling itself doesn’t break any new ground, as the blogged-about issue of substitution and ‘illness-only’ clauses has been covered by one of the Pimlico Plumbers cases from 2017.  

That said, the Shanks case does provide some useful reminders, and some interesting points of difference on substitution when pitted against the well-known Deliveroo case.  

For us status wonks, ‘Shanks’ also shows how an employment tribunal, at first instance, deals with holiday pay and ‘worker’ status claims in 2025.  

Remember, ‘Shanks’ is a direct engagement case… 

While limited company contractors interested in IR35 can be ‘let into the room’ to hear the useful reminders, it should be borne in mind that this exam invigilator case concerns a direct engagement.  

Nonetheless, the judgment in ‘Shanks’ from employment judge Muriel Robison is useful.  

Whether an individual is a ‘worker’… 

It’s useful because it highlights to those who are providing services via intermediaries that, before any analysis as to whether an individual is a “worker”, there must first exist a contract between the individual and the end-hirer. 

In the Shanks case, the end-hirer was the Scottish Qualifications Authority (SQA). 

But be aware of the differences if you’re a limited company (or Personal Service Company) contractor.  

A higher bar to hit 

With an intermediary, there would be no direct contract between the individual and the end-hirer. 

Therefore, the individual would have to persuade a tribunal to imply one – a more difficult task as they will only imply if it is necessary.  

And I don’t mean ‘necessary’ in respect of any claim, but of necessity to the business relationship, usually by finding the existing contract a sham.  

Two hurdles faced Mrs J Shanks… 

In having a direct contract with SQA, Mrs Shanks had no issue at this first hurdle.  

The second hurdle was the requirement for personal service.  

Interestingly, the contract between the claimant and SQA did not appear to have contained a written substitution clause.  

SQA were therefore reliant on evidence of what had happened and what they thought would have happened, in practice.  

Shift swapping, involvement, and illness-only exercising 

The problem that SQA faced is that this two-fold ‘evidence’ overwhelmingly tended to show an informal practice developing of individuals “swapping shifts”.  

And such shift-swapping was only with the involvement of the SQA (or their agents), and in circumstances where the invigilator who initiated the swap was indisposed due to illness or medical appointments.  

Where ‘Shanks’ chimes with Pimlico Plumbers at the Supreme Court (2017) 

On the facts, this was similar to that of the 2017 case of Pimlico Plumbers v Smith, where it was held the individuals did have to provide personal service.  

I cited this important case at this article’s outset. 

In Pimlico v Smith, there was likewise no express substitution clause, and similarly, an informal practice of the plumbers swapping shifts due to illness.  

In its January 2017 ruling in ‘Pimlico’ but in favour of plumber Gary Smith as a ‘worker’, the Court of Appeal (CoA) held that “a right of substitution only when the contactor is unable to carry out the work will…be consistent with personal performance”.  

This determination by the CoA in ‘Pimlico’ is central to the decision in ‘Shanks’ and is cited at 131 of the judgment. 

Where ‘Shanks’ differs from ‘Deliveroo’ 

Some commentators on the Shanks case have been quick to point out that SQA tried, but failed, to argue that the invigilators were identical to riders in the Deliveroo case.  

The difference between SQA (and Pimlico Plumbers) with the 2016 Deliveroo case is that the food delivery company not only had an express substitution clause for the drivers, but in practice they operated it without any restrictions. 

What were the substitution differences between ‘Shanks’ and ‘Deliveroo’? 

The only ‘limiter’ – to borrow the preferred term of Kingsbridge IR35 Consultancy Manager Matt Tyler – was that Deliveroo required the substitute to not be someone who they had previously terminated a contract with.  

This is the so-called ‘bad egg’ condition.  

Except in the case of the ‘bad egg,’ Deliveroo was not aware of the identity of the substitute, or the fact that one had been used on any particular occasion. 

When evidence impresses (and doesn’t) can be key  

In the food delivery firm’s case, this meant that although substitution was hardly ever used by the drivers (why would they substitute when they could simply choose not to log in), the lack of control that Deliveroo had over them impressed the court, comfortably convincing it that there was genuinely no requirement to personal service.   

As to who the court were impressed with in the Shanks case, it is extremely clear from the judgment that the claimant’s evidence was markedly preferred over SQA’s evidence. 

Win at tribunal, or else risk being like the hamstrung union in ‘Deliveroo’ 

But let’s ride back to ‘Deliveroo’ for one last important point. 

The union fighting Deliveroo was very determined and went all the way to the Supreme Court.  

But the union could only do so on the grounds of ‘freedom of association under human rights legislation’ (and it’s a case that did not succeed for the union).  

Why was the union hamstrung, and confined to such limited grounds?  

Well, the lack of personal service (i.e. that the substitution clauses were genuine and unfettered) was a finding of fact that could not be challenged or turned on its head on appeal.  

It goes some way to attest to the importance of the findings of fact at the initial tribunal stage. 

Final Shanks-Deliveroo takeaways for contractors  

Whether the engagement is direct or via an intermediary, the Shanks v SQA case is a useful reminder to parties that if they are to be contracting on the basis that the individual is not a worker, then they should ensure that the hirer/end-hirer has as little input into who does the work.  

And that very small input should include giving the individual Personal Service Company contractor as much ‘leeway’ to send anyone as is reasonably possible – both in practice and in the written terms.  

How Kingsbridge can help 

Navigating IR35 legislation and ensuring compliance can be challenging for contractors and businesses alike. Kingsbridge offers tailored support, including expert guidance on IR35 status assessments, compliance strategies, and risk mitigation. Their team is dedicated to helping contractors and businesses understand and adapt to the evolving tax landscape. 

They also offer a range of flexible business insurance options to support contractors, including Professional Indemnity, Public Liability, and Employers’ Liability cover, as well as add-ons like Cyber Insurance and Director and Officer’s Liability.

To find out more, get a quote or contact their experts today.

 

 

Partner at Chartergates, Richard Crabtree has considerable employment law experience and has spent the last 26+ years advising on matters of employment law and representing clients in employment tribunals all across the UK.

Richard Crabtree, Consultant at Chartergates

With considerable employment law experience, Richard has spent the last 26+ years advising on matters of employment law and representing clients in employment tribunals all across the UK.

Related topics

Contractors IR35

You might also like...

Back to resources
Close up photo of female worker at a desk with laptop and calculator, representing article on what insurance contractors need
Contractor Guides Contractors 03 Nov 2026

What insurance contractors need?

We know it can be a minefield for contractors when it comes to purchasing the right contractor insurance to protect…

Image of a handheld drill on a work bench, representing guide on how to insure work tools for tradespeople
Trades Trades Life 09 Sep 2026

How to insure your tools: a tradesperson’s guide

Most tradespeople spend a lot of time thinking about the next job, the next customer, or the next challenge on…

A flat lay of a desk with stationery and notebook with writing 'insurance checklist', representing guide on questions to ask when buying contractor insurance
Contractor Guides Contractors 24 Aug 2026

7 things to ask before buying contractor insurance

Buying contractor insurance isn’t exactly the most exciting item on your to-do list.  When you’re focused on winning contracts, meeting…

Image of tradesman leaning against white van looking at insurance quotes on his phone, representing article discussing cheap tradesmen insurance
Trades Trades Life 28 Jul 2026

Cheap trades insurance: how low is too low?

When you’re running your own trades business, it’s only natural to try and keep costs to a minimum. But for…

Photo of protest crowd in london, representing article on loan charge review scandal
Contractors News 15 Jul 2026

Why the Loan Charge scandal isn’t going away

In the late 1990s, loan-based remuneration schemes began to emerge before becoming widespread among contractors and freelancers during the 2000s.…

Image of tradesman's arm being bandaged, representing article on employers' liability insurance for tradespeople
Trades Trades Life 07 Jul 2026

Do tradesmen need employers’ liability insurance?

If you’re a tradesman running your own business, you might assume employers’ liability insurance only applies to corporate companies. But…

Contractors News 19 Jun 2026

The tax, pension and savings changes UK contractors need to keep on top of

The 2026/27 tax year might not be bringing one dramatic overhaul, but it marks the beginning of a multi-year shift…

Photo of dug out earth with construction worker on mini excavator, representing article on plant and machinery insurance
Trades Trades Life 01 Jun 2026

What is plant and machinery insurance?

From diggers and dumpers to cement mixers and compressors, plant and machinery are the backbone of many trades. Whether you’re…

Close-up of dates on a green calendar, representing article discussing claims made vs claims occurring in business insurance
Contractor Guides Contractors 26 May 2026

Simplifying insurance: what is claims made vs claims occurring

When you’re choosing insurance, you’ll often come across two terms: claims made and claims occurring. They both refer to the…

Tradesmen tools laid out on table, representing article on tool theft stories and keeping tools safe
Trades Trades Life 20 May 2026

Tool theft stories: tradespeople going beyond locks to keep tools safe

As tool theft continues to dominate headlines and social feeds, many tradespeople are no longer relying on standard security –…

Goodie bag from Powered Now Advice on Tap event, representing article on tradespeoples' concerns about tool insurance claims
Trades Trades Life 15 May 2026

Powered Now ‘Advice on Tap’: trade talk and tool theft troubles

Powered Now’s landmark event brings together tradespeople of all backgrounds. But conversations highlight the ongoing issue of tool theft, the…

Photo of builders discussing construction plans, representing article on what professional indemnity means for tradespeople
Trades Trades Life 28 Apr 2026

What is professional indemnity for tradespeople?

Many tradesmen assume professional indemnity is only for people with a desk job. But in reality, if your work involves…

Image of two builders carrying construction materials, representing article on do subcontrctors need their own insurance
Trades Trades Life 15 Apr 2026

Do subcontractors need their own insurance?

Knowing whether subcontractors need their own insurance can be confusing. Whether working in construction, roofing, plumbing, electrical work or specialist…

Image of construction hard hats representing a guide to what insurance a tradesman needs
Trades Trades Life 31 Mar 2026

What insurance does a tradesman need?

Insurance sounds like a good idea, but how do you know what insurance you need as a tradesman? No two…

Photo of a presentation screen at an event held by Kingsbridge on the JSL legislation and what it means for recruitment agencies
Partner News Partners 30 Mar 2026

What JSL will mean for you: Five lessons from our expert panel

Earlier this month Kingsbridge brought together a panel of industry experts to discuss the implications of the government’s new JSL…

Builder working on a house extension roof, representing a guide to contract works insurance for tradespeople including what it covers
Trades Trades Life 17 Mar 2026

What is contract works insurance?

However big or small your construction project is, contract works insurance could be a lifesaver if something happens. When you’re…

Image of bricklaying representing article on who needs trades insurance and what it covers
Trades Trades Life 10 Mar 2026

Who needs trades insurance?

If you work in the trades, chances are you’ve already heard people chatting about tradesman insurance, but have been left…

Calendar with date circled, representing guide on what a retroactive date is in professional indemnity insurance
Contractor Guides Contractors 26 Feb 2026

Professional indemnity insurance: what’s a retroactive date

Whether you’ve just taken out a professional indemnity policy or you’re shopping for new business insurance, chances are you’ve come…

HMRC Making Tax Digital campaign asset, representing article disucssing the upcoming changes for sole traders April 2026
Contractor Guides Contractors 16 Feb 2026

A ‘Making Tax Digital’ wake-up call for sole traders

The way Britain pays tax is entering its biggest modernisation in a generation, with Making Tax Digital (MTD) for Income…

Photo of HMRC London offices representing article discussing the Employment Rights Act 2025 being law, what changes it brings and what businesses need to do now
Partner News Partners 22 Jan 2026

Employment Rights Act 2025 ‘brings world of work into 21st century’

Big changes to the world of work have been on the horizon for a while and the Royal Assent of…

HMRC Self Assessment tax return letter for 2025 tax year sent to UK taxpayer with UTR and NINO
Contractor Guides Contractors 16 Jan 2026

Online Self Assessment tax return deadline: what to know for 2026 (and beyond)

If you’re required to file a Self Assessment tax return for the 2024/25 tax year, the deadline to submit it…

Contractor Guides Contractors 01 Jan 2026

What is the difference between a sole trader and a limited company?

One of the big questions for any contractor when they first set up as self-employed is whether you should operate as a…

Image of sparks caused by power tools, representing article on what makes a trade high risk for insurance
Trades Trades Life 18 Dec 2025

Trades cover: who’s considered high risk for insurance

If you’re in the trades, you already know the job isn’t without its risks. But did you know those risks…