The Working Time Regulations 1998 provide entitlement to holidays for employees (those employed under a contract of employment) and those who work under a contract to perform work personally for another party to a contract, known as limb (b) workers. In Addison Lee v Gascoigne, the Employment Appeal Tribunal (EAT) held that a bicycle courier was a worker under limb (b).
As a cycle courier for Addison Lee, Mr Gascoigne worked under a contract, which specifically stated that he was an “independent contractor”. Although he was entitled to choose the days and times when he was available, there was no corresponding obligation on the employer to provide work. However, the written contract stated that once he had logged onto the Addison Lee app, he was “deemed to be available and willing to provide Services”. There was no option for him to decline work.
Once a job had been sent through to him, the controller would keep in constant contact with Mr Gascoigne and could see his whereabouts via a GPS tracker; decide the order of the jobs he was required to do; and tell him what to do if a parcel could not be delivered. Mr Gascoigne was paid a piece rate determined by Addison Lee and still got paid if the job was cancelled or the customer did not pay. Mr Gascoigne claimed he was a worker and entitled to holiday pay and lodged a claim in the tribunal.
Under regulation 2(b), a "worker" means an individual who has entered into and works under any other contract whereby they are required to “perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual”.
The tribunal considered that a necessary ingredient of a contract for a limb (b) worker was mutuality of obligation. In other words, that Addison Lee was required to provide Mr Gascoigne with work and he was required to carry it out once it had been assigned to him.
Upholding Mr Gascoigne’s claim, the tribunal said that his contract did not reflect the reality of the relationship. In reality, during the period when he was “logged on” to the company’s app, there was a contractual relationship and when Mr Gascoigne was in the area there was the necessary offer and acceptance of work. Even though Mr Gascoigne could log off at any time this did not undermine the mutuality of obligations which existed when he was logged on for him to accept the work offered.
The tribunal also considered that Mr Gascoigne was under the direction and control of Addison Lee given the support and assistance provided by the controller and a pay structure which showed no sign that he was in business on his own account.
Addison Lee appealed the decision on two grounds – first that there was no mutuality of obligation between the company and Mr Gascoigne; and second that the tribunal’s factual conclusions were perverse.
The EAT rejected the appeal. As to Addison Lee’s argument that there was a distinction between mutual expectations and mutual obligations, the EAT relied on previous case law which made clear that expectations can crystallise into obligations Nor was an obligation confined to the period between acceptance of a job and completion of a job. The tribunal’s findings clearly supported mutuality of obligation throughout the log-on period.
As to the perversity challenge, the EAT rejected this on the basis that tribunal judgments should not be subjected to over-analysis of the reasoning process. All that was required was that it was correct in law. Mr Gascoigne was therefore a limb (b) worker and entitled to holiday pay.
This case and that of Pimlico Plumbers Ltd and anor v Smith (also summarised in this LELR) are part of a series of recent cases on bogus self-employment. This happens when employers seek to categorise those working for them as “self-employed independent contractors” in order to reduce their costs and deny basic employment rights to workers such as:
- the right to paid holidays
- protection from discrimination; and
- the right to bring a claim for unpaid wages in the employment tribunal.
A common tactic of employers is to write into the contract that the individual is “an independent contractor and that nothing shall render them an employee, worker or agent”. Oher common clauses include providing a right of substitution and denying any obligation to provide and accept work.
Ultimately whether someone is a worker or genuinely self-employed is a question of fact for the courts to consider. Employers who seek to draft contracts which attempt to present to the public that those working for them are part of the workforce while at the same time claiming that they are self-employed are increasingly being challenged. Following the decision in Autoclenz v Belcher (weekly LELR 229) the courts will carefully examine whether the terms of the contract or agreement truly represents the reality of the working relationship.
It is clear that until employment status is reformed those who are engaged on bogus self-employed contracts will continue to challenge employers who seek to deny them basic employment rights. However, as each case is dependent on its own facts it is unlikely that the cases will provide the much-needed clarity on employment status.
The government launched a number of consultations earlier this year following the Taylor Review (see Spring LELR 2018) including how employment status could be made clearer for individuals and businesses. In our response Thompsons called on the government to:
- use section 23 of the Employment Relations Act 1999 to extend to “workers” rights which are currently limited to “employees”
- simplify the definition of worker status
- put the burden of proof on the employer to prove that someone is not a worker.