In Addison Lee v Lange and ors the EAT has found that private hire drivers were in fact workers rather than self-employed and were therefore entitled to holiday pay and other statutory rights. This decision is probably no surprise to those familiar with employment status cases as it upholds the finding in Addison Lee v Gascoigne that cycle couriers engaged by Addison Lee were workers and not self-employed (though every case will turn on its own individual facts).
Employment status and the 'Gig Economy'
There have been a number of prominent cases in recent years concerning employment status as many individuals have claimed that the reality is that they are workers or employees, and should be treated as such instead of self-employed contractors. The importance of employment status is that employees and workers are entitled to enhanced employment rights, including (but not limited to) holiday pay, National Minimum Wage and protection from unlawful discrimination.
Employment status has become a particularly important focus in the era of the 'gig' economy. Pimlico Plumbers, Uber and CitySprint were unsuccessful in defending claims that their contractors were not workers on the basis that they exercised significant control over them, and required them to perform the contract personally. The personal service issue was the key factor in the Deliveroo case where couriers were found not to be workers because they could appoint a substitute when they were unwilling or unable to carry out a job offered to them.
The key argument that Addison Lee relied on was that its drivers were not under an obligation to accept work as they could reject it at any time. The EAT did not entertain this argument and found that when drivers were logged onto the drivers portal on the app (or otherwise) which distributed jobs, drivers were required to accept the work and could only reject it in occasional circumstances. There was also evidence that sanctions would be imposed if the drivers did not accept the work. The EAT held this supported that there was clear 'mutuality of obligation' when the drivers were logged onto the portal, i.e. drivers had to accept work and it was understood they would carry it out whilst Addison Lee were required to provide work to them to carry out.
In employment status cases, the Tribunal will look at the whole facts and the reality of the situation to determine if an individual is an employee, worker or genuinely self-employed when the express contractual provisions do not properly reflect the true agreement between the parties.
The key difference in this case compared to the Deliveroo decision was that Addison Lee drivers did not have the right to substitution. This was consistent with the finding that the drivers had to undertake the work personally, which also entitled the Tribunal to conclude that Addison Lee was not a client or customer of any business undertaking of the drivers. The right to substitution is a key factor that must be assessed moving forward to determine employment status. If it exists and is unfettered (for example there are no limits to it being exercised i.e. consent is not required to provide a substitute) then this greatly points to self-employment instead of employee or worker status.
In June this year an Employment Tribunal found that Hermes Parcelnet couriers were also workers. Hermes Parcelnet intend to appeal the decision. The outcome will undoubtedly provide useful guidance for cases concerning employment status in the future.