Another development for the gig economy: CitySprint courier establishes "worker" status

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Another development for the gig economy: CitySprint courier establishes "worker" status

Published 12 enero 2017

The employment tribunal has again decided that a so-called "gig economy" worker can claim some employment protections.

The "gig economy" refers to the situation where people are engaged by companies on a job-by-job basis.

In Dewhurst v CitySprint UK Ltd the tribunal ruled that a bicycle courier was a "worker" of the courier firm, despite contractual documents describing her as a self-employed contractor. This meant Ms Dewhurst succeeded in her claim for holiday pay and would also be entitled to certain other employment rights available to workers, such as rest breaks and the national minimum wage. This decision follows on from similar ruling against the taxi service Uber in October last year, which found that drivers should be classed as workers rather than self-employed (see our report here).

The facts

Ms Dewhurst works as a cycle courier for CitySprint and typically works four days a week from 9:30am to 6:30pm. During that time she moves from job to job, with gaps between jobs ranging from ten minutes to an hour. At the start of the day she speaks to a controller and logs into the company's electronic tracking system, Citytrakker, and only logs out at the end of the day when she goes home. The Citytrakker system tracks couriers' whereabouts and helps the controller to assign jobs. Controllers and couriers remain in contact through radio and mobile phones throughout the day. (CitySprint is in the process of developing an App). The contractual documentation between CitySprint and Ms Dewhust purports to treat the couriers as self-employed contractors and has several clauses which emphasise the self-employed nature of the work. When the document is "signed" on recruitment the courier is required to read and acknowledge a number of key terms in an electronic tick list on a computer.

The tribunal decision:

The employment tribunal looked at the contractual documentation but also examined the reality of the situation in detail. The reality of Ms Dewhursts working conditions made it clear she was integrated into CitySprint's business. In particular it noted as significant:

  • The couriers do not have discretion to determine the manner in which the services are performed.
  • The substitution clause was so prescriptive that in effect it allowed no more than that the couriers could swap jobs with a colleague.
  • Although the document referred to couriers self billing and using invoices, in practice couriers do not submit invoices for individual jobs, instead the company automatically calculates payments due and pays them weekly in arrears
  • The tick box exercise on recruitment illustrated the clear inequality of bargaining power.

What does this mean for employers?

We have yet to hear if CitySprint intend to appeal this decision, however, Uber have already applied for permission to appeal the decision from last year. It is likely, therefore, we will continue to hear more on this subject, particularly as there are already other similar cases lined up to be heard in tribunal this year against Addison Lee, Excel and E-Courier.

Whilst the recent tribunal decisions do not set a precedent it is clear that the direction of travel – drawing from developments in case law, the approach of the HMRC and government scrutiny – is shifting towards protecting the rights of individuals and ensuring that their categorisation, whether as employees/ workers/ self employed, is properly representative of what is happening on the ground.

For employers who wish to use a freelance workforce and reduce the risk of their workforce being found to be "workers", what can you do?

  • Ensuring that contractual documentation in place between the business and the workforce is sufficiently clear, understandable and accurately reflects how the relationship operates in practice is a must. How much day-to-day, operational control is exercised over what the workforce do and when, how and on what terms do they do it? Complex and highly prescriptive arrangements that leave the workforce with little freedom to control which jobs they pick up and how they execute service delivery will increase the risk of them being classed as workers.
  • The risk is still greater if the individual has no flexibility to put forward someone else to fulfil the job. The right to use a substitute is one of the hallmarks of genuine self-employment.
  • Careful consideration should be given to the financial and risk-sharing arrangements in place. An arm's length arrangement in which the individual shoulders financial and other business risks is consistent with them being in business on their own account.
  • Particular attention should be given to the nature and frequency of payments and to which party bears the risks and responsibilities when problems or complaints arise.

Inevitably, there is a balancing exercise to be carried out and no one-size-fits-all solution.

For further information please contact Nick Chronias, Richard Loxley, Joanne Bell, or your usual DAC Beachcroft contact.

 

Authors

Richard Loxley

Richard Loxley

London - Walbrook

+44 (0)20 7894 6383

Joanne Bell

Joanne Bell

Manchester

+44 (0) 161 934 3179

Key Contacts

Nick Chronias

Nick Chronias

London - Walbrook

+44 (0)20 7894 6701

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