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The ‘gig economy’ model was dealt another blow earlier this week after yet another tribunal ruling that the so-called “self-employed” were in fact workers.

Minicab firm Addison Lee, one of Uber’s big rivals, were found to have wrongly classed three of its drivers as self-employed. The Central London Employment Tribunal ruled that the drivers should have been classified as workers and were therefore entitled to rights such as the National Minimum Wage and holiday pay. The drivers were said to have earned the equivalent of around £5 per hour as self-employed contractors. However, on the basis that the drivers were in fact workers, they would be entitled to the minimum wage of £7.50 per hour. In addition, the drivers would also have accrued holiday entitlement and would be entitled to payment in respect of that entitlement.

As a reminder a worker is defined under the Employment Rights Act 1996 as an individual “who has entered into or works under …(a) a contract of employment, or (b) any other contract whether express or implied .. whereby an individual undertakes to do or perform any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any professional business undertaking carried on by the individual.”

During the tribunal hearing, the minicab firm argued that, although it presented the drivers (in its branded cars) to the outside world as part of its organisation in reality each individual was actually running their own small business, whereby Addison Lee was the client or customer of each individual driver and where there was no contractual obligation to provide their services.  In those circumstances, having regard to the statutory definition, they could not be regarded as workers. However, the tribunal rejected this. While it was not clear whether there could be said to be an “overarching contract”, whereby Addison Lee was generally obliged to provide work and the drivers were required to provide their services, it was absolutely clear that when logged on to Addison Lee’s system the drivers were undertaking to perform driving services personally. In relation to Addison’s Lee’s status, it could not be accepted that the drivers were entering into arrangements between two independent businesses. The drivers needed to hire a car supplied by Addison Lee to do their work, they could not use the vehicle for other commercial purposes, they did not market their service generally and derived the whole of their income from driving work with Addison Lee for whom they worked “pretty well continuously”. Although the drivers had some freedom to choose when and where to work and took on some economic risk these factors were not enough to negate worker status. The suggestion otherwise was said to “defy evidential gravity”.

There will be a further (remedy) hearing to decide what level of pay and holiday pay the drivers are entitled to. The representatives of the claimants estimate that holiday pay alone for each worker could amount to £4,000. Furthermore, while the case was brought by only three drivers, it could lead to an opening of the proverbial floodgates, with Addison Lee using around 3,800 so-called self-employed drivers.

This is not the first time Addison Lee has found itself on the wrong side of a tribunal decision on employment status. Only two months ago an employment tribunal held that a cycle courier working for the firm was a worker, rather than a self-employed independent contractor. Regular readers of Stronachs Employment Insights will have noticed a clear turn in the tide in terms of the determination of the rights of individuals in the gig economy. The decisions against Addison Lee are just a number in a long line of tribunal judgements finding that so-called self-employed contractors are in fact workers. Last year a tribunal held that drivers of Uber were workers for the purposes of UK employment law and not self-employed. This decision was appealed by Uber and is scheduled to be heard by the Employment Appeal Tribunal this week. Similar tribunal cases are set to be heard early next year involving couriers for the delivery companies, such as Hermes. Earlier this year, we looked at the findings of the Taylor Review (http://www.stronachs.com/news-insights/insights/53-employment/281-the-gig-s-up-calling-time-on-the-gig-economy), which made several recommendations impacting gig economy relationships. It is expected that consultations on implementing Taylor’s recommendations are to begin imminently and any substantive proposals for changes in the legal regime are keenly awaited.

So, what does this mean for businesses operating in the gig economy? Well, cases concerning employment status are certainly not a new phenomenon and each case will be determined on its facts, meaning the outcome of any one case can be unpredictable. However, the recent trend for employment tribunals to find that individuals who had been labelled self-employed contractors are in fact workers is undeniable. The level of press coverage gig economy cases have been getting will likely encourage more individuals to pursue claims, perhaps fuelled by the recent abolition of tribunal fees. Many of these gig economy cases have also been brought with the backing of unions (including the above case, which had the support of the GMB trade union) which is pursuing a clear agenda in terms of the strengthening of individual rights in the modern work context. It is clear that businesses which rely on individual contractors can no longer afford to ignore this trend. Such businesses should consider carefully whether their arrangements are, in practice, consistent with their contracts, they may have in place, whether they are complying with their obligations to the individuals involved and the risks of being found not be doing so.

If you require advice on any of the above issues, please do not hesitate to contact a member of the Stronachs Employment Team.

Rowan Alexander, Senior Solicitor

Chambers UK 2106

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