Gig Economy News

Our next case concerns the gig economy. It is an ET case so is not binding on other cases but is indicative of how the judiciary approach similar cases. Employment status and the gig economy is rapidly becoming two irritating buzzwords because every time they are mentioned it is closely followed by phrases like “grey area” or “no concrete law”.

Cases against Pimlico Plumbers, Uber, Addison Lee and Sash Windows have all found in the Claimant’s favour and that self-employment was in name only. However, the Government is yet to enact the Taylor Report which could mean these cases are overruled and new type of employment status is created for gig workers.

We recently covered the Central Arbitration Committee (CAC) Trade Union recognition case of IWGB v Deliveroo. Whilst not an employment case, the CAC held that Deliveroo couriers were not entitled to union recognition because there was a clause in their contract which stated they could substitute themselves for a replacement. This meant the work was not done personally, a key component of worker/employee status, and that Deliveroo was a client of the couriers, not an employer.

The question this week is:

If a contract states there is a right to substitute for a replacement and not perform work personally, can the person fulfilling that contract be a worker?

Leyland, was one of several Claimants who acted as couriers for Hermes, the Respondent. The Respondent is one of the country’s largest package delivery couriers. The Claimants were some of the many thousands of couriers who delivered packages for the Respondent.

In the written contract between the Claimants and the Respondent it stated that couriers could substitute themselves if they were unable to perform the work personally. However, this substitution had to be done by a covering courier or a designated substitute. The Respondent had authority to override the Claimant’s choice of substitute.

The Claimant’s brought ET claims alleging they were workers and therefore entitled to the Minimum Wage, Holiday Pay and to not have unauthorised deductions made from their wages. The Respondent relied on the substitution clause in the contract between the Respondent and the Claimants as evidence they were not workers.

The ET held that the terms of the written contract did not reflect the reality of the legal obligations between the couriers and the Respondent. For example, whilst the Claimants could substitute themselves, the Respondent had an overriding power to veto that substitution and stipulate the work be performed personally. The ET held the Claimants were indeed workers.

The takeaway point:

As with Pimlico Plumbers, what is in the written contract is irrelevant if the performed contract is to the contrary. In its judgment the ET was very damming of the differences between the performed contract and the evidence given by Hermes’ witnesses.

Whilst this is only an ET case and Hermes may try (most likely in vain) to appeal in the EAT (and CoA and Supreme Court), the overriding theme is that Employment Judge’s will not be fooled by what is written in the contract if the reality is to the contrary. There is little evidence of whether the CAC case examined the reality of the Deliveroo substitution clause but if it was genuine this would spell a distinction between Deliveroo and Hermes cases.