mortlock charlotteThe Employment Appeal Tribunal (EAT) have dealt another blow to the gig economy's gradual diminution of workers' rights by finding that a cycle-courier for the taxi and courier company Addison Lee was a 'worker' for the purposes of the Working Time Regulations 1998. Jordan Daruvalla and Charlotte Mortlock look at how this judgment is improving protection of workers' rights whilst increasing the uncertainty for businesses in the growing gig economy.

The Employment Appeal Tribunal (EAT) has now handed down its judgment on Addison Lee's (AL) attempt to overturn the previous ruling that its couriers were indeed 'workers' entitled to basic employment rights. The EAT upheld this decision and, in doing so, re-emphasised the importance of assessing the reality of the working relationship rather than its contractual classification.

Background

Despite its potentially significant impact on the gig economy (see below), the original claim issued by the courier was not for a substantial amount and concerned only 1 weeks' holiday pay that AL, the Appellant in the current case, had refused to pay to one of its cycle-couriers. They argued that as the courier was an independent contractor, as specified in his contract, he was not a 'worker' within the Working Time Regulations 1998 and was therefore not entitled to basic employment rights such as holiday pay. The Employment Tribunal judge found for the Claimant asserting that when he was logged on to Addison Lee's app, through which he received his courier jobs, he had to be willing and available to work. He could not decline the jobs he was given and was therefore under a sufficient degree of employer control to warrant worker status.

Appeal

Addison Lee appealed the decision on the following grounds:

  1. As there was no requirement to log on to the system, it was akin to a 'zero-hours' contract and therefore did not entail the necessary mutuality of obligation required for worker status; and
  2. The multi-factorial assessment of whether or not the respondent was a worker was “suffused with factual error”.

In relation to the first ground, the EAT found that the expectations and established practices of the parties did in fact create a mutuality of obligation. For example, once a courier had received a job, there was an expectation that they would complete it. The system also allowed Addison Lee to track the couriers via GPS to ensure they met their obligation to deliver on time. In the EAT's view, the fact that the courier was free to choose when (if at all) to log on to the system did not negate a worker relationship arising during the logged-on periods. The EAT were not persuaded that the lack of negative consequences for not logging on (unlike for Uber drivers) justified a departure from their previous decision in Uber BV and ors v Aslam and ors, which found that those drivers were workers entitled to basic employment rights. For further details and discussion of this case, view our previous article.

The EAT also found that the second ground for appeal being the multi-factorial assessment of worker status was correctly applied and that AL's arguments concerning the language used in the previous judgment did not present any challenge to its conclusion that "the written terms of contract did not reflect the reality of the situation".

Impact

Although the decision of the EAT is not surprising (and largely reflect the decision in the Uber case), they also evidence the Tribunal's continuing readiness to use the reality of the working situation to trump contractual terms. This common-sense approach can be praised for its promotion of workers' rights to, for example, the National Minimum Wage, paid holiday and rest breaks in the growing gig economy. Despite this, it does create significant uncertainty for businesses operating within such sectors, who must now undertake a similar assessment of working reality rather than relying on their own contractual terms. Inevitably, this will be a difficult and costly exercise for companies wishing to draw upon the flexible and temporary working practices of the gig economy, whilst also wanting to avoid employment relationships and rights they did not intend to create. Our advice to these businesses is to 'health check' current labour models to limit the risk of litigation and financial exposure.

The current judgment also signals further issues that may cause concern for businesses. For example, the EAT used AL's own marketing and recruitment material as evidence of a worker relationship by contrasting this with the arms-length relationship purported by their contract. It is hoped that, as the Government continue its consultations as part of the Taylor Review of modern working practices, further guidance will bring greater clarity for companies and individuals operating in the gig economy.

For further information please contact Charlotte Mortlock, senior associate or your usual contact in the Foot Anstey Employment Team.