The perennial question of worker status has hit the headlines again.
The Employment Appeal Tribunal (‘EAT’) has confirmed that three drivers for the taxi and courier firm Addison Lee were not, as the company claimed, self-employed and in business on their own account. Rather, they were workers who were entitled to the National Minimum Wage and to holiday pay.
Hermes, Pimlico Plumbers, Deliveroo and Uber are just some of those to have recently been on the wrong end of judicial decisions about employment status. And common to these cases has been the tribunals’ clear message that whether an individual is to be classed as an employee, a worker, or a self-employed contractor depends on the day-to-day reality of what they do, and the way in which they do it.
In September last year, an employment tribunal decided that three drivers who had brought claims against Addison Lee were workers. It was a significant decision for those involved, and for others waiting in the wings, because worker status affords certain rights and protections not available to the self-employed.
The Employment Tribunal scrutinised the specifics of the drivers’ role and their relationship with Addison Lee. It concluded that the facts did not point towards self-employment, despite the company’s contracts with the drivers seemingly painting that picture. The contracts referred to the drivers as ‘independent contractors’ who were under no obligation to work (and who could choose when to work), or to be provided with work.
Against that backdrop, the Tribunal examined the reality of what it actually meant to be an Addison Lee driver. Facts that influenced its decision included:
– The company provided induction, training and guidance on how the job should be done.
– There was a code of conduct and a set of driver guidelines.
– Most drivers hired liveried vehicles from a company associated with Addison Lee.
– Drivers were told that they would be representing Addison Lee whenever they were in the vehicle.
– Each driver was given a hand-held computer, known as an XDA, which was used to allocate jobs.
– When a driver was notified of a job, he or she had to accept it straight away. An unacceptable refusal could lead to a sanction.
– The drivers did not agree the fares with customers; Addison Lee did.
The Employment Tribunal found that there was an overarching agreement that Addison Lee would provide work and that the drivers would carry out that work – one of the key indicators of employee/worker status.
Drivers undertook to do work personally (which is a requirement of worker status) when they logged on to Addison Lee’s system. They had a reasonable expectation that when they logged on they would be offered work. And Addison Lee, too, must have expected the drivers to log on in sufficient numbers, and to work for sufficient hours, for the business model to be fulfilled. All in all, this was a symbiotic relationship, the Tribunal said. Addison Lee needed the drivers to log on, and the drivers needed to do so in order to pay their overheads and start earning money. There were mutual expectations.
The Tribunal went on to say that even if it was wrong on the overarching contract point, worker status was conveyed in any event by the drivers’ personal performance of jobs, while they were logged on.
Employment Appeal Tribunal
The EAT dismissed Addison Lee’s appeal. The Tribunal had been entitled to reach the conclusion it had. The drivers were not self-employed. They were workers who, despite having some flexibility in how they worked, owed obligations to the company (and vice versa).
The EAT pointed out that no honest driver would put a company to the expense of taking him on, and training him, unless he was undertaking to do some work for that company. Equally, an honest and reputable company would not encourage drivers to commit substantial time and money to be trained and to hire vehicles, if it were not undertaking to give them a fair chance of getting bookings.
And even though the written contract between the parties suggested something different, the Tribunal was entitled to take a ‘realistic and worldly wise’ approach and find that these obligations did in fact exist.
The EAT went on to confirm that the Tribunal was also right to have found that the time when the drivers were logged on was ‘working time’.
Businesses operating in the gig economy, and those that otherwise engage freelancers, consultants, or other types of contractors would be wise to review their relationships with those individuals. What has become very clear in recent months, but has in fact always been the case, is the courts’ willingness to look beyond the labels applied by companies and by those working for them. A ‘self-employed contractor’ will only be such if all of the circumstances align with the features of that status. The same applies to employees and to workers.
The Addison Lee decision, like those that came before it, has wide-reaching consequences for businesses and may well open the floodgates. For some, this decision will prove costly, as compensation payouts follow. For others, the cost will be in modifying processes and systems – perhaps even entire business models. For the rest, it will be in enhancing the workplace rights of people who ought to be considered to be employees or workers.