Today the latest ruling to go against gig-economy companies ruled that British drivers at car service Addison Lee are workers, entitling them to rights such as the minimum wage.
In September last year, a British employment tribunal decided that several drivers were not self-employed, which gives them few entitlements in law, with the decision then appealed by Addison Lee.
Unions argue that the gig economy – where people often work for various firms at the same time without fixed contracts – is exploitative, whilst firms say drivers enjoy the flexibility and take home more than the minimum wage.
Paul Holcroft, Associate Director at Croner, comments:
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.
A spokesman off Addison Lee comments,
In common with most of the industry, the majority are self-employed, and with earnings at a record high, over 60 percent said they were likely or very likely to recommend working for Addison Lee in our most recent driver satisfaction survey.