The Claimant, Mr Gascoigne, was a cycle courier working for Addison Lee's courier business. At the start of his engagement he was provided with a radio, palm top computer/XDA, an app, GPS tracker, branded bag and t-shirt. Addison Lee provided insurance against loss or damage to parcels and Mr Gascoigne paid for this via a small weekly charge. Mr Gascoigne's contract stated that he was an independent contractor and that while he was free to choose the days and times when he worked, when logged onto the system, he was deemed to be available and willing to provide services. When logged on to the system he generally completed 15 to 20 jobs per day and was paid at a piece rate of around £3.25 per job. He paid his own tax and National Insurance and was registered as self-employed.
Mr Gascoigne brought a claim in the Employment Tribunal for holiday pay on the basis that he was a worker.
The Tribunal upheld Mr Gascoigne's claim that he was a worker. The Tribunal found that the written terms of contract between the parties describing Mr Gascoigne as an "independent contractor" did not reflect the reality of the situation and that when logged on to Addison Lee's app, there was a contract with mutual obligations for jobs to be offered and accepted.
Addison lee appealed against this decision on two grounds:
The EAT rejected both grounds of appeal, the Employment Tribunal's finding of worker status was upheld. In line with the worker status finding Mr Gascoigne is entitled to holiday pay.
The Tribunal's findings clearly and sufficiently support the conclusion that, during the log on period there was a contractual relationship with the identified obligations to offer work, provided Mr Gascoigne was in an approved area, and for the offer to be accepted, provided the parcel was not too heavy. Previous case law makes it clear that practical commercial arrangements such as this can over time crystallise into legal obligations.
With regard to the second ground of appeal the EAT likened the objections to a "pernickety critique". The multi-factorial test applied by the Tribunal was not perverse and so this ground of appeal was also dismissed.
This decision follows the trend in recent employment status cases of self-employed contractors being found to have worker status. The Courts and Tribunals have been flooded with employment status cases in recent years and this heightened activity shows no sign of abating. We are eagerly awaiting the decision of the Supreme Court in the Pimlico Plumbers' case which was heard earlier this year on 20 and 21 February.
The impact of the Court of Justice of the European Union ("CJEU") decision in King v Sash Windows also needs to be considered. In this case the CJEU held that workers who have been denied the opportunity to take holiday not only accumulate leave, but can carry it over for years and are entitled to payment in lieu on termination. The CJEU decision throws into question the UK's two year back stop on unlawful deductions claims and the decision of the EAT in Bear Scotland Limited v Fulton whereby unpaid holiday cannot be claimed as the last in a series where more than three months has elapsed between deductions. Workers who have been wrongly labelled as "self-employed contractors" and as such have not been provided with an "adequate facility" to take holiday could be claiming holiday pay dating back to when they started work (or 1998 when the Working Time Regulations were introduced). If the floodgates are opened to holiday pay claims where an "adequate facility" has not been provided there is a potential significant risk to employers in the gig economy. The Sash Windows case has been reverted back to the Court of Appeal to consider how far back holiday pay claims can go and is due to be heard later this year on 20 and 21 November this year. We will keep you updated.
It is also worth noting that the Government has launched a consultation on employment status following the Taylor Review. The consultation is considering the employment status tests which have evolved from decades of case law and whether they should be codified in primary legislation. The consultation is also focusing on app-based platform workers and whether time spent waiting for tasks while logged into the app should count towards the National Minimum Wage. The consultation closes on 1 June 2018.
There is a pressing need for this complex area of law to be clarified. The direction of travel is clear, with worker status being the predominant finding. Clarity would be welcomed by all; however with Brexit to contend with it is questionable how far up the Government agenda the issue of employment status will find itself. Employers engaging individuals in the gig economy should take the time now to calculate the potential risk of a worker status finding and should consider taking appropriate steps to mitigate this risk.