In the UK, the definition of "worker" includes both employees and anyone else working under a contract under which they undertake to do or perform work or services for the other party personally. This definition is generally applied, including for the purposes of the Working Time Regulations 1998 (WTR) (which are relevant for the purposes of this case). The EU Working Time Directive (WTD), from which the WTR derives, does not give a definition of "worker".

It is established under UK law that, for the purposes of determining worker status, the following considerations will be relevant:

  • there must be a contract between the worker and the putative employer;
  • the contract must require personal service by the worker;
  • the other party to the contract is not the customer or client of any business undertaking or profession carried on by the individual; and
  • there must be sufficient mutuality of obligation between the worker and the putative employer.

The body of case law that has developed on worker status makes clear that it is not only the written terms of the contract but the reality of the relationship between the putative employer and the individual that is relevant. In other words, it is not possible for an organisation to avoid conferring worker status on an individual simply by engaging them on contractual terms which bear little or no resemblance to the reality.

But what happens if the terms of the contract do not reflect the reality, but could do if the individual wanted them to? Should an individual obtain worker status where the contract genuinely allows them to have the flexibility a worker would not have, but they elect not to make use of that flexibility?

Facts

The reference to the CJEU here concerns the employment status of a Yodel parcel courier. The courier is engaged under a courier services agreement. The agreement expressly provides that the courier may:

  • appoint a substitute or sub-contractor to carry out all or some of the services (this right is unfettered provided that the substitute is at least as qualified as the courier); and
  • perform services for other delivery companies at the same time as performing services for Yodel.

Other couriers engaged on the same terms do, in practice, make use of sub-contractors or carry out work for other delivery companies alongside making their Yodel deliveries. However, the claimant in this particular case has not exercised either of these rights.

CJEU reference

Case law on worker status has dealt extensively with the right of substitution. The Supreme Court, in the case of Autoclenz Ltd v. Belcher [2011] ICR1157 accepted that it was uncontroversial that "if a contractual right, as for example a right to substitute, exists it does not matter that it is not used". In its consideration of the issue last year, the Central Arbitration Committee (which deals with union recognition and collective disputes) found that the existence of a substitution clause which could be used in practice was fatal to a worker status claim brought by Deliveroo riders. It is quite clear under UK law that a substitution clause which may genuinely be used by an individual is inconsistent with worker status.

The question that has now been referred to the CJEU is, essentially, whether this approach is inconsistent with EU law. Whilst the WTD itself is silent on the definition of "worker", the CJEU has tended towards a wider interpretation of "worker" than has been applied in the UK. For example, in Fenoll v. Centre d’aide par le travail "La Jouvene" and another (Case C-316/13) [2016] IRLR 67 the CJEU held that "any person who pursues real, genuine activities, to the exclusion of activities on such a small scale to be regarded as purely marginal and ancillary, must be regarded as a 'worker'". The employment judge in the Yodel case considers that the definition of "worker" that has developed under UK law may be inconsistent with the intention of EU law. He has therefore asked the CJEU to consider (among other points):

  • whether the right to appoint a substitute precludes the individual from being a worker:
    • at all; or
    • when they are exercising the right of substitution;
  • whether it is material to a determination of worker status for the purposes of the WTD that the claimant is not appointing a substitute where others on the same terms have; and
  • whether it is material to a determination of worker status for the purposes of the WTD that the claimant is not working for others at the same time as Yodel where others on the same terms have elected to do so.

If the answer is that the claimant is not precluded from being a worker where he is not exercising the right of substitution, and that what others on the same terms elect to do is irrelevant, the implications could be huge. But, if we leave the EU on 31 October 2019, do we really need to think about this at all?

Brexit

Of course, until the UK leaves the EU any decisions made by the CJEU will be binding on the UK courts. If the UK remains in the EU after 31 October 2019, the decision on any references made after that date (at least while we remain a member) will be binding and UK courts and tribunals will have to make any relevant judgments in light of them.

The European Union (Withdrawal) Act 2018 (which is already law) makes express provision for this sort of thing. It states that a court or tribunal will not be bound by any principles laid down or any decisions made by the CJEU, on or after exit day. This law will stand alone if the UK leaves the EU on 31 October (or any later date) with no deal. Unless the CJEU acts very quickly on the Yodel reference then, if we leave on 31 October with no deal, it is unlikely we will ever get an answer to the questions posed in this case.

However, if we leave on 31 October (or a later date) with a deal, then it is likely that we will still get an answer, and it will still be binding. The terms of the EU Withdrawal Agreement negotiated by Theresa May state that, in cases where references are pending, the CJEU will continue to have jurisdiction to give preliminary rulings on requests from UK courts and tribunals, provided that they are made before the end of the transition period. Whilst this deal itself seems unlikely to progress, it would be surprising if this term is one that has been renegotiated by Boris Johnson as part of his revised deal (the contents of which, at the time of writing, are not known). If we leave the EU on or after 31 October with a deal, then we will still get an answer to the questions posed in the Yodel case and that answer will be binding. In any event, it is likely that after Brexit CJEU decisions would be persuasive. Of course, with things on the Brexit front changing so rapidly, by the time this article is published all of this may be known. However, the extent to which the UK would continue to follow EU law after the end of any transition period remains to be seen.

Potential implications

The law on worker status, as it stands, allows organisations to design a contract and a relationship with contractors to ensure that those they engage do not attain worker status. However, if the CJEU takes the view that, in each case, it is the reality of what the individual chooses to do under the contract rather than the reality of what they are able to do that is relevant to the question of worker status, this would represent a significant change. Ultimately, in that case, the individual would be able to determine their status as a worker by the extent to which they chose to use the rights granted to them under their contracts. If Brexit does not get in the way, more interesting times could lie ahead for the worker status question and the gig economy.