In a further blow to the UK’s flourishing gig economy, an employment tribunal in London this month issued a landmark decision that cycle courier Margaret Dewhurst was in fact a worker of CitySprint and not a self-employed independent contractor and consequently entitled to holiday pay.
Couriers within the company are engaged under a ‘self-employed’ contract to provide courier services in which it is made clear that the courier is under no obligation to provide his or her services and CitySprint is under no obligation to provide work for them to do — couriers only get paid for the work that they do and are not entitled to holiday pay, maternity pay or sick pay. Whilst the contract further states that the courier may appoint a substitute to provide their service (a key feature of self-employed independent contracts) the tribunal found that this did not happen in practice.
Whilst the company maintained the courier was paid through a billing and invoice system, the tribunal found that in practice couriers did not need to submit invoices for their work as CitySprint automatically calculates payments due and pays them weekly in arrears, after deductions.
The tribunal examined the reality of the relationship between the parties and concluded that the self-employed supplier contract did not accurately reflect the true relationship. As a courier, Ms Dewhurst wore a CitySprint uniform, was required to log into the company’s tracking system, was expected to work when she said she would, was directed by a controller and even told to smile to provide a professional service on behalf of CitySprint. Ms Dewhurst made medical deliveries to hospitals in London, delivering clinical notes, blood samples and prescriptions, including restricted drugs.
The tribunal concluded that as a courier, she was integrated into the business and the degree of control exercised by CitySprint was such that she met the definition of a ‘worker’ under the Employment Rights Act during periods when she was working for the company and was therefore entitled to holiday pay as claimed. While this is only a first tier tribunal decision which may well be subject to appeal, it is the first of four cases currently being pursued against courier companies in the Central Employment Tribunal in London.
In October, two Uber drivers successfully won preliminary rulings before an Employment Tribunal that regardless of the ‘self-employed’ contracts they had entered into with Uber, they were classified as workers under the same legislation and as such should be entitled to national minimum wage, holiday pay and sick pay. That decision is now subject to appeal to the Employment Appeal Tribunal.
Deliveroo couriers have also apparently been required to sign an indemnity clause agreeing to indemnify Deliveroo against any costs or legal fees incurred by the company should a courier seek to take a case to an Employment Tribunal to challenge their self-employed status. Whilst clearly a serious deterrent to any courier thinking about taking a claim, the enforceability of such a clause is certainly open to legal debate.
These cases raise serious issues for the future of the UK’s gig economy in which large companies rely on an increasing number of self-employed independent contractors on short-term engagements to deliver core services. Whilst advocates of the business model point to the mutual benefits of ‘no-strings’ flexibility for both parties; the degree of control companies understandably wish to exercise to ensure efficient and professional service delivery runs a real risk of falling foul of the Autoclenz v Belcher principles and a tribunal determination that the contractor is entitled to legal protections as a worker including national minimum wage, holiday and sick pay, even where the written contract between the parties states to the contrary.
Companies will need to ensure that their contracts are carefully drafted to accurately reflect the nature of the relationship and intentions of the parties and as each case is determined on its own facts, legal advice should be sought where necessary to avoid costly litigation.
Louise McAloon is a partner specialising in employment law in Worthingtons Solicitors, Belfast. For advice telephone the family law department of Worthingtons on 028 9043 4015.