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Case law: Another ruling says business generating and passing work to 'independent' third parties may have to treat them as workers

Businesses which generate and pass work onto third party individuals, but who currently treat those individuals as self-employed, should consider whether they may in fact be 'workers' under UK law and entitled to basic employment law rights, following a second important legal ruling.

Legal Alert

This update was published in Legal Alert - February 2017

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A recent legal ruling said Uber drivers were workers and therefore entitled to basic employment law rights. In a second case, the Employment Tribunal has now ruled that bike couriers purportedly engaged as independent contractors can also be workers.

In this case, a bike courier carried out jobs for a courier company. She spoke to the controller of the company at the start of each day and kept in touch using her personal mobile phone and a radio. She also signed on to the company's 'citytrakker' software, which tracked where she was and allocated delivery jobs to her.

Her contract with the company said she was a self-employed contractor and there were many contractual clauses consistent with this, for example:

  • The company was not obliged to allocate jobs to her and, if it did, she was not obliged to accept any
  • It was up to her how she carried out jobs, including the routes she used on deliveries
  • She could work for other companies while working for the courier company
  • She could provide a substitute to do any jobs allocated to her, provided they met certain criteria

If she was self-employed she was not entitled to employment law rights such as the national minimum/living wage, paid annual holidays, rest breaks, maximum weekly working hours and auto-enrolment pension contributions.

However, she claimed she was a 'worker' and therefore entitled to certain basic employment rights. The legal test of whether an individual is a 'worker' is:

  • whether they work under a contract of employment or any other contract (whether express or implied) under which the individual undertakes to do or perform personally any work or services for another party to the contract, and
  • the other party's status is not (by virtue of the contract) that of a client or customer of the individual's profession or business undertaking

Relevant factors include whether the individual is providing a personal service, whether the employer is a customer of the individual's business, and the degree of control the 'employer' exercises over the individual.

The claimant argued that, despite the terms of the contract, she was really a worker because reality:

  • She could not turn down jobs allocated to her
  • It was not up to her how she carried out jobs - particularly, she had to wear a uniform, follow a script when greeting customers and follow a company procedure if a parcel could not be delivered
  • She was not allowed to work for others while on the company's books
  • She could not easily provide a substitute, unless it was another courier already on the company's books

The Employment Tribunal agreed with her and ruled that she was a worker, and was therefore entitled to basic employment law rights.

Operative date

  • Now

Recommendation

  • Companies entering into contracts with self-employed contractors should ensure not only that the contract terms indicate the contractor is self-employed, but that actual working practices are consistent with the contract terms - or risk the contractor being deemed a worker and entitled to employment law rights

Case ref: Dewhurst v CitySprint UK Ltd ET/2202512/2016

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.