In the latest in a long line of worker status claims emerging from the "gig economy" the Employment Appeal Tribunal has upheld a decision which found that Addison Lee drivers were workers despite being labelled as independent contractors in documentation. In doing so the EAT confirmed that tribunals are entitled to use a "realistic and worldly wise" approach to determine employment status where it is alleged that the contract is not an accurate reflection of actual practice.
Kevin Lau, associate in our employment team, summarises the key issues in the case and the points to take away.
Summary of case
In the recent tribunal case of Addison Lee Ltd v Lange, three drivers made claims for monies owed to them in reliance on national minimum wage and working time regulations. Their claims turned on whether they had worker status. The Tribunal concluded that they were workers and the Employment Appeal Tribunal (EAT) agreed. The Respondent operated a personal transport service and the three individuals engaged by the Respondent were, according to the contractual documents, self- employed contractors, as is common in the gig economy. In relation to Addison Lee customers who were account holders, the drivers were sub-contractors for Addison Lee and for non-account bookings, the drivers made the bookings as "principal" with Addison Lee acting as a "disclosed agent" in those bookings.
In reaching its conclusion, the Tribunal adopted the approach set out in the Supreme Court case of Autoclenz Ltd v Belcher (2011), looking not only at the paper work between the parties, but also at the factual circumstances of the case and how the drivers operated in practice, including the arrangements which brought the drivers into the Respondent's business model. In the Addison Lee case the drivers were interviewed, tested, inducted, trained, and then entered in a probation period at the start of their engagement.
On the facts of this case, the Tribunal accepted there was an overarching contract between each driver and the Respondent meaning that they were workers. Even more conclusively, the Tribunal noted that even if there was no overarching contract, they would still be workers within the statutory definitions on the basis that there was a contract "whereby the individual undertakes to do or perform personally any work or services" and concluded that this was what was happening in practice when drivers logged on to the employer's IT bookings system and the Tribunal stated "they were undertaking to perform driving services personally. No other conclusion is possible".
Other relevant factors which informed the Tribunal's decision included that the drivers had agreed to hire vehicles from the Respondent's affiliated company, to enter into hire agreements for those vehicles, worked under the Respondent's rules, and that the drivers operated in vehicles with the Respondent's branding.
On a separate appeal point around working time, the EAT also confirmed, that when the individuals were logged on to their portable computers in order to have work automatically allocated to them they were "working" for the purpose of working time irrespective of whether they were carrying any passengers at the time. Drivers were agreeing to accept jobs allocated to them or give an
acceptable reason for refusing the job, otherwise a sanction could follow.
Other key points to take away
The case should serve as a reminder to employers, and particularly those who operate either in the gig economy, but more generally, to those businesses who engage individuals as self-employed contractors, that Tribunals are more and more willing to consider the actual arrangements and look behind the paperwork to determine whether an individual is a worker.
Please click here for our initial article on the first Addison Lee case in relation to cycle couriers which we reported on in May 2018 and which raised similar issues.
We are also currently waiting for the Court of Appeal decision on the Uber case which again echoes these gig economy and worker status issues. The case was heard in October 2018 so watch this space for an update.
Moreover, the Taylor Review looked at modern working practices and the Government responded earlier this year with a number of recommendations and consultations on this issue (a summary can be found in our previous article here). As a result there may be future developments and changes to the tests for employment status as well as legislative steps to improve workers' rights. In particular, one change happening from April 2019 is the need to have itemised payslips for workers (click here for more information).