Gig-economy latest: important new decision from the EAT

In the latest case to tackle the issue of employment rights in the so-called ‘gig-economy’ the Employment Appeal Tribunal has held that an ostensibly…

In the latest case to tackle the issue of employment rights in the so-called ‘gig-economy’ the Employment Appeal Tribunal has held that an ostensibly self-employed cycle courier was in fact engaged as a worker.

In Addison Lee Ltd v Gascoigne the EAT found that the company’s designation of the claimant as an ‘independent contractor’ did not accurately reflect the reality of his working life. Various factors, including the fact that the claimant did not have the freedom to negotiate his terms of his engagement, and was obliged to accept any work offered while he was logged in to the company’s app, pointed to the fact that he was actually a worker. He was therefore entitled to receive a number of employment-related benefits including statutory holiday pay.

What happened?

The claimant, Mr Gascoigne, was engaged by Addison Lee as a cycle courier. His contract described him as an ‘independent contractor’ and expressly stated that he was not an ‘employee, worker, agent or partner’ of the company and should not hold himself out as such.

Controversially, the contract also contained a clause requiring Mr Gascoigne to indemnify the company against any liability (including costs) resulting from any claim made by him based on employee or worker status. This was clearly intended to deter him from challenging his self-employed label.

Addison Lee argued that the claimant could not be a worker, as he was not under any obligation to perform work. He could choose his own working hours and when to log-on the company’s app to be notified of jobs. He could take holiday without prior permission from the company (although in practice, he did usually pre-book his leave).

Mr Gascoigne was paid a piece rate for each delivery (determined by the company) and was not able to negotiate a higher rate. The company also deducted weekly sums in respect of insurance and administration fees.

The decision

The Employment Tribunal that first heard the claim held that Mr Gascoigne was engaged as a worker. The EAT agreed.

The EAT held that, while the claimant’s working pattern was variable and he clearly worked flexibly, there was still “mutuality of obligation” between the parties when he was logged into the app and had made himself available for work. When he was logged on, he was expected to accept the jobs he was offered. There was no ‘decline’ button, and if he was unable to accept a job due to exceptional circumstances (for example a punctured tyre) he was obliged to call the company’s controller for the job to be reallocated. He could not simply turn it down. This pointed towards worker status.

This reasoning echoes the earlier decision of the EAT in Uber BV v Aslam where taxi drivers engaged through an app platform were found to be engaged as workers for the time they were logged in and available to accept bookings. Interestingly, in that case, the company went a step further and imposed a penalty on drivers who declined jobs (suggesting even more emphatically that the drivers were workers and not genuinely in business on their own account).

It was also important to the EAT that Mr Gascoigne was required to provide “personal service”. There was nothing in his contract to suggest that he was able to send a substitute to do his work and he was required by his employer to have specific clearance from the Disclosure and Barring Service to perform his role.

The issue of “personal service” was also central to the decision of the Central Arbitration Committee (CAC) in IWGB v Deliveroo, although the outcome was quite different. In that case, it was held that the delivery riders’ ‘unfettered’ right to send a substitute to perform their work strongly indicated that they were genuinely self-employed.

What does this mean for me?

his case is the most recent in a line of employment status decisions which have predominantly, although not exclusively, found that members of staff designated as self-employed were in fact engaged as workers or even employees.

The decision reinforces the key message from earlier cases that an Employment Tribunal will carefully analyse the reality of the working relationship to establish an individual’s employment status. The label attached to the working arrangements in contracts and other documents will not be determinative. If you have any concerns that your contracts do not accurately reflect the way your staff work day to day, we would be happy to help you assess the risk of an employment status challenge.

The recent Taylor Review looked closely at the issue of employment status and whether employment law has kept pace with new ways of working. The Government is currently carrying out a consultation which may result in changes to existing employment status tests. However, this decision and other recent ‘gig-economy’ cases, arguably demonstrate that established principles can already be effectively flexed to accommodate innovative business models.

Mandy Higgins is a Partner in the Employment, Pensions and Immigration team and is based in Liverpool. If you have any questions please do not hesitate to contact Mandy or speak to your usual Weightmans advisor.

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