Carolyn Brown

Written by: Carolyn Brown

Carolyn Brown

Partner, Head of Client Legal Services

Court of Appeal: gig-economy businesses must look at bigger picture when assessing worker status

Workers are entitled to basic employment law rights such as National Minimum Wage, holiday pay and sick pay, as well as working time, discrimination and whistleblowing protections. Workers’ rights are far more valuable and extensive than they used to be. So, the working status battleground between employer and employee on the issue of conferred self-employed status, which gig economy employers see as a cost-effective model, long ago moved firmly into the area of the status of workers. 

Employees enjoying the higher status with 2 years’ continuous service also have unfair dismissal rights, so it’s important to clarify where they stand. 

Achieving worker status and its aligned workers’ rights can increase employment costs significantly for businesses. As a result, couriers working in the gig economy are often categorised as “self-employed”, meaning they are entitled to none of these rights, reducing employment costs for employers.  

This was the subject of the recent Court of Appeal case Stuart Delivery Ltd v Warren Augustine. In this case, a courier was able to release assigned courier slots he had agreed to cover to any other courier already approved by the employer. Nevertheless he was still considered to have “undertaken to perform the work personally” and so was considered a worker. This was because, although he could release slots to other couriers, he remained personally responsible for ensuring those slots were covered, and did not have the autonomy to send a substitute, but could only to use other couriers who had signed up with Stuart Delivery Ltd. 

The employment tribunal considered, and the Court of Appeal agreed, that this could not be described as a right on the part of the courier to send a substitute chosen by himself. It "was not, in reality, sufficient right of substitution to remove from him that personal obligation to perform his work personally”.

The employer - a logistics delivery and storage company - engaged couriers as self-employed individuals who could connect to the employer’s customers via their smartphone, through which the courier could accept and be paid for delivery jobs. Couriers could also sign up to time slots where they committed to be in a certain area for 90 per cent of that time in return for a guaranteed payment from the company of £9 per hour. However, the courier would not be paid if they were not available for jobs in the area for the majority of that time. Crucially, if a courier signed up to the time slot but couldn’t later fulfil it, they would face a financial penalty if another courier engaged by the company didn’t offer to fill the slot. 

The Court of Appeal decided the courier met the criteria to be a worker rather than self-employed because he had undertaken to ensure any work or services under his contract were completed, either by him or by another courier already signed up with Stuart Delivery Ltd. On the facts, the employer’s business model relied upon ensuring the courier turned up for the slots he was signed up for. There was no unrestricted right of substitution negating the obligation for him to do the work personally, because of the conditions placed on the courier if he wished to relinquish himself from a slot. 

The Court of Appeal urges businesses to look at the bigger picture of their obligations when making an assessment of worker status. This latest incarnation of a gig economy model has not succeeded in avoiding the costs of its couriers having workers’ rights entitlement in return for adopting this delivery model.

Businesses operating similar “gig style platforms” or engaging individuals as self-employed should review their contractual engagements and their business models to ensure there is an express and, in practice an unrestricted, right of substitution if they wish to avoid the risk of employment rights worker status claims and potential PAYE and NIC liabilities.

Add comments

Related services

Share your thoughts

*These fields are mandatory