In Addison Lee Ltd v Gascoigne – the latest decision on employment status in the gig economy – the Employment Appeal Tribunal (EAT) dismissed Addison Lee's appeal against an employment tribunal decision that its cycle couriers were workers and therefore entitled to holiday pay.

Background

There have been a series of high-profile claims in recent years in which individuals have argued that they are workers or employees, rather than independent contractors, and thus are entitled to enhanced employment rights such as minimum wage and holiday pay. The issue is particularly contentious in the gig economy, where individuals have been challenging their lack of employment rights.

So far, the trend has been for tribunals to find in favour of worker status, mainly on the grounds that the control exercised by the company and the requirement of personal service pointed against self-employment. Major companies including 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 were also found to be workers by an employment tribunal, and the EAT has recently considered whether this decision was correct.

Facts

Addison Lee cycle couriers were allocated delivery jobs by a controller when they were logged into the Addison Lee app. There was no express penalties for refusing to accept a job; however, there was 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."

Nonetheless, the employment tribunal found that the couriers met the test for worker status and therefore were entitled to holiday pay.

Decision

On appeal, Addison Lee's main argument was that its couriers were under no legal obligation to work; they could log on or off at will and decide whether to accept jobs when logged on. At most, there was "gentle pressure" from the 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 a "mutuality of obligation" – meaning a contractual obligation for Addison Lee to offer work and for the individual to accept it, subject to their occasional entitlement to decline if a parcel was too heavy. The EAT stated that it did "not accept that [the claimant's] entitlement to log off at any time [was] at odds with the obligation to accept work offered when he was logged on".

According to the EAT, the lack of any express penalty for failing to accept work when logged on made no material difference. It upheld the employment tribunal's findings that the established practice and expectation of both parties was that the couriers would carry out work as directed. This was sufficient to prove that they were workers under the legal test.

Addison Lee made various other arguments, none of which made any headway, including the following:

  • Couriers could opt out of group insurance in favour of their own insurance.
  • Couriers waited in a particular place for jobs out of self-interest, rather than because they were obliged to.
  • Couriers could take any route that they wanted to, rather than a prescribed one.

The EAT ruled that these factors did not determine that a courier was self-employed when logged on and available for work.

Comment

All employment status cases will turn on their own facts; therefore, the EAT decision does not mean that all couriers are in the same position. An employment tribunal will consider the details of the arrangement and how things work in practice in order to decide whether an individual is an employee, a worker or self-employed.

Addison Lee couriers do not have the right of substitution, which was key to the different outcome in Deliveroo. As such, 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 goes further than the approach taken in the 2017 Uber judgment, in which there were findings of fact that:

  • there were express penalties for failing to accept a sufficient amount of work; and
  • a driver's account status would be lost if he or she failed to accepted 80% of the trips offered.

In Addison Lee there was merely an understanding that in practice the courier would carry out work offered when logged on – even though there was no real penalty for failing to do so.

The issue of employment status is due to be reviewed by the Supreme Court in Pimlico Plumbers, which was heard in February 2018. Although Pimlico is not directly about the gig economy, the judgment is likely to provide important new guidance on the law, which will be relevant for all types of status case.

For further information on this topic please contact Colin Leckey at Lewis Silkin by telephone (+44 20 7074 8000?) or email (colin.leckey@lewissilkin.com). The Lewis Silkin website can be accessed at www.lewissilkin.com.

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