Employment Status in the “gig economy”

Following other recent court and tribunal decisions, such as UberPimlico Plumbers and Hermes, the Employment Appeal Tribunal (EAT) in a recent case, has again demonstrated how, when determining employment status, the Tribunals will look beyond the written terms of the contracts and examine how contracts are performed by the parties in reality. 

In the recent EAT case, the claimants were drivers who worked for the respondent private hire firm, Addison Lee. They claimed that the respondent had incorrectly classified them as independent contractors, when in fact they were workers. This would mean that they were entitled to holiday pay and to receive the national minimum wage for all the time (excluding break times) that they logged into the respondent’s driver portal, which was the software used for accepting driving assignments. 

The Employment Tribunal found that, whilst not stated in any contractual documentation, when a job was notified to the driver via the portal, s/he had to accept it. If they did not do so, they had to give an acceptable reason. Where the Controller deemed the reason to be unacceptable, the matter was then referred to a supervisor.  Refusing a job in this way meant that a sanction might follow, which could include removing them from the system for a period of time so that they could no longer accept work.  In other words, something more than economic force was required to impose on drivers an obligation to accept individual journeys which it was not in their interests to accept.  This was inconsistent with the terms of the contract that stated the drivers had a right to refuse work while logged on.  Also relevant was the fact that their contract did not contain a substitution clause. The drivers had to perform the work personally. 

Other indications that the claimants were workers included:

  • A rigorous recruitment process and training to a high level (the Respondent issued new drivers with induction, training and documentation which indicated how they should do the job).
  • Six-day weeks and long hours.  Unless a certain minimum amount of work was undertaken in any week, a service charge of £35 a week was charged to the drivers.
  • Driving vehicles that were branded as Addison Lee cars (branding and logos could not be removed and the drivers could not use the vehicle for other commercial or income earning purposes).
  • Renting cars from Addison Lee (and not being able to use the car to work for other private hire operators).  Whilst the Respondent did not promise to provide any driver with a specific amount of work or even a minimum amount of work, drivers were told that the average driver worked for 50- 60 hours per week. Indeed, a driver needed to work between 25-30 hours per week to recover the fixed costs of vehicle hire. The cost of any parking penalties (along with other costs, such as insurance) would be deducted from drivers’ wages and they were not permitted to appeal the penalties. 
  • The fact that as private hire drivers they could not tout for business as drivers in business on their own account.
  • The great level of control that the respondent exercised over the drivers, including strict standards regarding dress codes and how the drivers provided their services (for example, drivers were given a script for contacting customers, were directed not to play music in the cars unless requested by customers and told not to engage in conversations about ‘sex, politics, religion or anything controversial’).

The EAT’s Decision

The EAT held that the employment tribunal at first instance were correct to find that the private hire drivers engaged by Addison Lee were workers and not self-employed. The EAT concluded that the drivers had accepted an obligation to undertake driving jobs allocated to them, notwithstanding the terms of the contract that stated otherwise.  The EAT agreed that the Employment Tribunal were correct in finding that there was an overarching agreement whereby the drivers were “impliedly and necessarily undertaking to do some driving work”, rather than engaged on a series of separate contractual assignments on a self-employed basis as set out in the contract.  The EAT agreed with the Employment Tribunal that, where the contractual provisions do not properly reflect the true arrangement between the parties, the factual reality determines the individual’s employment status.

Comment

This follows other recent caselaw, whereby the tribunals have performed a multi-factual analysis of what actually happens in practice, even if the contractual terms provide that the relationship is a self-employed one.  The recent caselaw concerns workers who are in a subordinate position and so cannot sensibly be viewed as contracting with a client of their business on a self-employed basis when providing their services. Following this most recent ruling on worker status, the Government has very recently published its report setting out its response following the consultation on modern working practices.