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'Self-employed' cycle courier entitled to employment protection

In the latest case focussing on employment rights in the gig economy, a cycle courier has been found to be a ‘worker’ by the Employment Tribunal despite contractual documents under which she was purportedly engaged as a self-employed contractor (Dewhurst v CitySprint UK Ltd).

The gig economy

The ‘gig economy’ is characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.  From an employer's perspective, such arrangements allow for greater flexibility, reduced overheads, and the opportunity to select the best individuals for specific projects.  Critics point to exploitative practices and financial insecurity for individuals.  The gig economy has come to prominence recently with the Tribunal ruling in favour of Uber workers which we reported in October and other high profile issues over the hours, pay and conditions of workers in large online courier like Hermes, Deliveroo and Amazon.

Employers in this sector often seek to keep operating costs low through a business model where individuals are engaged as independent, self-employed contractors rather than ‘workers’ who would be entitled to a number of rights including national minimum wage, paid annual leave and whistleblowing protection. 

Self-employment was a sham

Ms Dewhurst is a cycle courier for CitySprint. She typically works four days per week, normally from approximately 9:30am to 6:30pm.  During this time she moves from job to job mainly in central London.  She remains in contact with CitySprint throughout the day via mobile, phone radio and the company's electronic ‘Citytrakker’ device.  Gaps between jobs can range from ten minutes to an hour and during this period she is on standby.

Ms Dewhurst brought a claim for two days' holiday pay in respect of holiday which she had taken but not been paid for.  In order for her claim to succeed she needed to demonstrate that she was a ‘worker’ for the purposes of the Employment Rights Act 1996.  CitySprint pointed to the contract under which she was engaged which confirmed that Ms Dewhurst was self-employed and was neither a worker nor an employee.

In signing the contract, Ms Dewhurst was required to confirm that:

  • she was under no obligation to provide her services;
  • CitySprint was under no obligation to give her any work;
  • she was able to send a substitute in her place to do her work;
  • it she did not work she would not get paid;
  • she was not entitled to holiday or sick pay; and
  • she was an independent business responsible for her own costs.

But the Tribunal also looked behind the contract in order to consider the reality of the working relationship. They found that in practice there were a number of significant differences between the contract and what happened in practice.  In particular they noted that Ms Dewhurst and her cycle courier colleagues are:

  • expected to work when they say they will;
  • directed by CitySprint throughout the time that they are working;
  • instructed on how to carry out their role -  including instructions to "smile with your greeting" and to wear the CitySprint uniform;
  • told what to do if parcels could not be delivered;
  • told when they will be paid and are paid by CitySprint's formula after it has made deductions;
  • effectively prevented from exercising the right to appoint a substitute to carry out work on their behalf; and
  • referred to by CitySprint as "our couriers".

In light of these findings, the Tribunal held that the any concept of Ms Dewhurst operating a business on her own was a sham.  They concluded that she was a worker and was therefore entitled to paid holiday as claimed.

What next for similar businesses?

Following the Uber decision, this is the latest example of a tribunal finding employment protections for individuals engaged in the gig economy.

Organisations which rely on similar business models should be alert to this decision and the potential for litigation of their own.  As awareness of the issues increases, employers can expect individuals who are denied employment rights to challenge the self-employed label if their working arrangements are more akin to those of a worker. Although these decisions are fact specific (and Uber have appealed the finding against them), there appears to be a clear indication of the direction of travel.  Such employers should consider the financial and PR impact of claims against them and should also be aware that Employment Tribunals will look behind contractual documentation if they suspect that it does not reflect the true nature of the working relationship.

The issue of employment protection for those in the gig economy looks likely to remain a central focus in employment law in the coming months. The government is currently undertaking a review of employment practices focussing on the gig economy and is currently inviting submissions for an inquiry into self-employment and the gig economy.  The deadline for written submissions is 16 January 2017.

TLT will continue to update on developments in this area as they arise.

Contributor: Dave Maton

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2017. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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