In the latest decision on employment status in the gig economy, the Employment Appeal Tribunal (“EAT”) has dismissed an appeal by Addison Lee against an Employment Tribunal (“ET”) decision that its cycle couriers were “workers” and so entitled to holiday pay.

Background

There have been a series of high-profile claims over the last couple of years in which individuals have argued they were actually workers or employees, not independent contractors, and so entitled to enhanced employment rights such as the minimum wage and holiday pay. This issue is particularly contentious in the so-called gig economy, where individuals have been challenging their lack of employment rights.

The trend of the cases so far has been to find in favour of worker status, mainly on the grounds that the control exercised by the company and a requirement of personal service pointed against genuine self-employment. Major companies such as Uber and CitySprint have been unsuccessful in defending such claims. One notable exception is Deliveroo, whose drivers were found not to be workers by the Central Arbitration Committee because they could appoint substitutes.

Cycle couriers working for Addison Lee have also been found by an ET to be workers, and the EAT has just considered whether or not this decision was correct.

The EAT’s decision

Addison Lee cycle couriers would be allocated delivery jobs by a controller when they were logged into the relevant app. There was no express sanction for refusing to accept a job, but also no option in the app to refuse a job - although the courier could contact the controller in exceptional circumstances.

The contract with the couriers expressly stated: “…there is no obligation on you to provide the Services to Addison Lee or to any Customer at any time or for a minimum number of hours per day/week/month. Similarly, there is no obligation on Addison Lee to provide you with a minimum amount of, or any, work at all”. The ET nonetheless found that in reality the couriers met the test for worker status and so were entitled to holiday pay.

Addison Lee’s main point on appeal was the argument that its couriers were under no legal obligation to work. They could log on or off at will, and decide whether or not to accept jobs when logged on. At most there was “gentle pressure” from a controller to accept jobs, but no adverse consequences if they did not.

Despite this, the EAT concluded that when an individual was logged on there was “mutuality of obligation” – meaning a contractual obligation for Addison Lee to offer work and for the individual to accept it, subject to the individual’s occasional entitlement to decline if a parcel was too heavy. The EAT said: “…we do not accept that [the claimant’s] entitlement to log off at any time is at odds with the obligation to accept work offered when he was logged on”.

According to the EAT, the lack of any express sanction for failing to accept work when logged on did not make a material difference. It upheld the ET’s findings that the established practice and expectation of the parties was that both sides expected the courier would carry out work as directed. This was sufficient to mean they were workers under the legal test.

Addison Lee made various other arguments, none of which made any headway. These included: the fact that couriers could opt out of group insurance in favour of their own insurance; the fact they waited in a particular place for jobs out of self-interest rather than because they were obliged to; and the fact they could take any route they wanted to rather than a prescribed one. The EAT ruled that these factors did not determine that a courier was genuinely self-employed when logged on and available for work.

Implications

It is important to remember that all employment status cases will turn on their own facts, so this decision does not mean that all couriers are in the same position. An ET will always look at the detail of the arrangements and how things worked in practice in order to decide whether an individual is an employee, worker or genuinely self-employed.

It is worth noting that Addison Lee couriers do not have the right of substitution - a key reason for the different outcome in the Deliveroo case. As the law currently stands, this means that a genuine right of substitution is likely to be a factor that weighs heavily in favour of self-employment.

The EAT’s approach to mutuality of obligation is significant as it goes further than the approach taken in last year’s Uber judgment. There were findings of fact in the Uber case that there were express sanctions for failing to accept a sufficient amount of work and, in particular, that a driver’s account status would be lost if he/she failed to accepted 80% of the trips offered. In the Addison Lee case, there was merely an understanding that in practice the courier would carry out work offered when logged on – even though there was no real sanction for failing to do so.

The whole issue of employment status is due to be reviewed by the Supreme Court in the Pimlico Plumbers case, which was heard in February this year. This case is not directly about the gig economy, but the judgment is likely to provide important new guidance on the law which will be relevant for all types of status case.

Addison Lee Ltd v Gascoignejudgment available here