In our last article we looked at the problems caused by the rapidly growing gig economy. The Employment Tribunal has spent the last few years dealing with a wealth of Employment Tribunal claims from the gig economy, arguing that individuals are workers and entitled to benefits like holiday pay and rest breaks. This article looks at the current status of the cases and the dividing line between the Uber drivers on the one hand, who are workers and Deliveroo riders on the other, who are not.
What is the legal test?
The cases all centre around the question of worker status. The test for worker status varies slightly depending on the context, however, in general to be a worker an individual must:
- be working under a contract
- be obliged to provide personal service (i.e. they should do the work themselves rather than pass it on)
- not be a customer of a client of the business
The question of whether there is mutuality of obligation (i.e. to give and accept work) is also relevant, as are the surrounding circumstances.
Most companies in the gig economy carefully word their contracts with individuals to try and take them outside of this definition, for example providing that they don’t have to perform the work personally and can provide a substitute and that there is no obligation on them to accept work or be offered work. Most of the case law has therefore focused on whether the way the work is conducted in practice reflects the terms of the contract.
The most recent case to hit the headlines is the ongoing case against Uber. At the end of December 2018 the Court of Appeal announced its decision that Uber drivers are workers for the purpose of the national minimum wage, working time rules and other protections.
Uber drivers drive their own cars and are free to chose when they make themselves available to accept bookings. They are assigned a territory to work within by Uber. They then receive bookings via the Uber app. The written contractual terms say that Uber only acts as an intermediary, providing booking and payment services, and the drivers are independent contractors.
A number of Uber drivers brought claims that they were workers and that Uber had failed to pay them the national minimum wage or provide holiday and holiday pay. The Court of Appeal accepted the drivers’ claims. They decided that looking at the contracts and the way the drivers worked in practice, any driver who has the Uber app switched on and is within the territory in which they are authorised to work and is able and willing to accept assignments, was working for Uber under a worker contract. Uber were not just an intermediary, Uber is a transportation business and the drivers provide the skilled labour to operate this business. Uber therefore owe these individuals significant back wages and holiday pay.
Uber has been given permission to appeal to the Supreme Court and therefore we now need to wait for the Supreme Court judgment for a final decision on this case.
Similarly in a case against Citysprint UK Ltd the Employment Tribunal decided a Citysprint courier was a ‘worker’ rather than self employed and was thus entitled to paid holiday. The Employment Tribunal found that the terms of contract did not reflect the true relationship between the parties, as the individuals in practice had very little control of how they performed the services.
A similar decision was reached in a case against Pimlico Plumbers Ltd, where the Employment Tribunal considered the employment status of Mr Smith who worked as a self-employed operative for Pimlico Plumbers for a number of years before he was dismissed. The Employment Tribunal found he was a worker, again due to the reality in which he worked and the level of control Pimlico Plumbers had over his work. For further information about this case please see our previous article.
More recently in a case against Addison Lee the Employment Appeal Tribunal decided that their drivers were similarly workers. In this case, the claimants entered into an agreement to hire cars. A part of this agreement included the use of a computer ‘XDA’ which required each driver to log into at the start of their shift. Once the driver was logged on, the work was automatically distributed. If a driver refused a job and id not provide reasons for the refusal there were sanctions in place. The Employment Tribunal found that each was a worker and therefore entitled to some basic protection.
The Deliveroo case
Although the above cases suggest that individuals in the gig economy will generally be workers, these are all very fact sensitive and worker status cannot be assumed.
The case against Deliveroo demonstrated this. In the Deliveroo case, the issue of worker status was looked at from a slightly different angle, looking at whether they were workers for the purpose of union recognition and collective bargaining.
In the Deliveroo case, it was found that the way Deliveroo worked in practice did reflect their contractual terms. Deliveroo had cleverly made key changes to their contracts before the case came to the Tribunal.
In particular, Deliveroo riders had clear rights to provide a substitute in their place, and to take a cut of the substitutes’ pay. There were very few limitations on this right, so even after accepting a delivery order, the rider could ask someone else to take their place. Deliveroo provided evidence that some riders in fact provided substitutes in practice. Because there was no obligation to provide personal service, the riders were not workers.
For further information regarding the Deliveroo case, please see our previous article.
This case is a reminder that employment status is always decided on the particular facts and that organisations can significantly reduce the risk of claims by introducing appropriate contracts.