Minicab company Addison Lee has lost its appeal against a workers’ rights ruling, the latest in a series of significant “gig economy” cases.
So how should employers respond to the latest ruling? We spoke to Paul Holcroft, Associate Director at national human resources and health & safety consultancy, Croner to ask what advice they are issuing to employers.
Paul explains that the Tribunal will look at how the agreement operates in practice, rather than cleverly drawn up clauses in the agreement itself:
“The Employment Appeal Tribunal’s decision is further confirmation that employment status cases are won, and lost, based on the reality of how the working relationship operates in practice.
“Although Addison Lee argued that their drivers were self-employed contractors who were operating their own business, the Employment Appeal Tribunal (EAT) found that the terms and conditions drivers were required to sign were “unrealistic” and did not reflect the true nature of the working relationship. Instead, the EAT upheld the earlier employment tribunal’s decision that the drivers were actually ‘workers’. This means the drivers are entitled to receive worker rights including National Minimum and Living Wage, paid holiday, minimum rest breaks and more.
“As the latest case to be lost by a ‘gig economy’ organisation, the decision is an important reminder that employers need to ensure they are correctly determining the employment status of their workforce. Rather than solely relying on their contractual documentation, employers need to take note of the employment status tests, including whether they have control over the individuals and if they have to provide personal status.
“Other factors will also be considered by the tribunal such as whether they can work for others, how they are integrated into the company, who carries the financial risk of a job being doing poorly, and whether pay can be negotiated by the individual.
“With nearly 4,000 UK drivers, Addison Lee are facing a significant back pay liability to compensate their drivers for losses suffered by being incorrectly classed as self-employed. Another high-profile employment status case, whilst we await the Court of Appeal’s decision in the Uber hearing, will again raise the question in individuals’ minds of whether they are being treated lawfully by their employer or contracting organisation.
“Without having to pay a fee to go to tribunal, employers may find they are receiving employment status claims from self-employed contractors, or even workers, to test whether they should be entitled to greater employment rights.