The Employment Tribunal (‘ET’) has held that despite contractual terms expressly referring to couriers as being self-employed, they were in fact workers following a consideration of what happens in practice.
- Importance of identifying the correct employment status
Under UK employment law there are three main categories of employment: an employee, a worker and a self-employed person. Each category is entitled to different levels of employment rights.
An employee is as an individual who works, or had worked, under an implied or written contract of employment. They have an obligation to receive and do the work provided and are entitled to all statutory employment rights; they are therefore the most protected.
A worker is someone who is personally contracted to provide services, however there is little obligation for a worker to receive or do work, such as a casual worker or those on zero-hour contracts. Workers have fewer but some statutory employment rights such as to paid holiday and to receive the national minimum wage. They are not protected from unfair dismissal or entitled to redundancy pay.
A self-employed person works for themselves and are responsible for how and when they work. They would ordinarily provide an invoice for their services and are entitled to the fewest employment rights. They are however protected under health and safety legislation and against discrimination.
The Claimants in this case argued that they were workers rather than self-employed, and were therefore entitled to holiday pay from the Respondent. The ET was presented with a similar situation against the Respondent in January 2017 in which it was found that a courier was a worker, rather than a self-employed contractor. Following this case, the Respondent changed its contractual terms to expressly state that the couriers are engaged on a self-employed basis with no right to holiday pay. The Claimant however argued that despite what is stated in the contract, nothing changed in practice following its introduction and they should therefore be considered as workers by virtue of the ET’s previous decision against the Respondent.
The ET considered the contract introduced in 2017 in depth which was clear and expressly stated the couriers were self-employed rather than workers, and highlighted that this should not be disregarded. The ET recognised that the contract did not require personal service and contained a lengthy substitution clause and thereafter went onto assess this right of substitution in practice.
It concluded that despite having the contractual right to substitute, this was a theoretical right only and neither party expected it to be exercised in practice. It was clear that the claimants did not consider the right to be practical or financially worthwhile. Therefore, when considering what happens in practice, the ET held that the dominant feature of the contract remained personal performance. It was further recognised that none of the Claimants worked as a cycle courier for another business and when considering the requirement to inform the Respondent that they had finished for the day, there was a general expectation by both parties that the claimants were available to accept jobs and would perform them personally. Accordingly, the Claimants were workers for the period that they were ‘on the circuit’ so were entitled to holiday pay.
- Implications for employers
Employers engaging self-employed individuals should ensure that their contractual terms are clear and expressly state the nature of the relationship. As this decision highlights, it is also important for employers to consider what actually happens on the ground as this may become significant in the event of any claims relating to their employment status.