March 27, 2017

It’s the performance that counts

In the latest of a series of decisions about the gig economy, an Employment Tribunal again confirmed that when reviewing whether an individual is truly self-employed or is in fact a worker, the main factor is how the contract is actually performed rather than what the parties have set out in writing.

Mr Boxer worked 9 hours per day, 5 days per week as a cycle courier for Excel Group Services (Excel). Mr Boxer's contract with Excel, described him as a ''subcontractor'' and he was registered as self-employed with HMRC.  Excel did not pay Mr Boxer when he took a week's holiday between 8 and 15 March 2016 and so he decided to claim for his holiday pay.

Excel then offered to pay him for his holiday but would not make any concessions about Mr Boxer’s employment status.  Mr Boxer sought a declaration about his status and succeeded in persuading the Tribunal that he was not an independent contractor but was in fact a worker, with rights to holiday pay.

In determining the status of Mr Boxer and in turn, his claim for paid holiday, the employment tribunal considered a number of factors, including the nature of Mr Boxer’s relationship with Excel.  They noted that there were several features that distinguished his activity from that of a busy contractor agreeing to take on a series of jobs for jobs for a custom, including that:

  • Mr Boxer had signed a contract with Excel but that he had had no choice about the terms or pay and there was no negotiation or tendering involved. The tribunal considered that the inequality of bargaining power between the parties was very notable;
  • the Excel business model required Mr Boxer to work 5 days per week under the control of a controller, with Mr Boxer being expected to pick up jobs as and when allocated and deliver the packages in the order prescribed. He was expected to work, and in return was entitled to expect a steady stream of jobs but he was also expected to stand by in between jobs in specific locations.Whilst he enjoyed some flexibility, this had to be by arrangement and with notice, so that when Mr Boxer needed time off; he would have to run this by his controller in advance, though Excel was usually accommodating;
  • Mr Boxer worked predominantly for Excel; he had no other full-time work, although on occasions, he took time off to attend auditions as an actor or to do a more sedentary job for a visa company which sometimes offered him work. The contract between Excel and Mr Boxer did contain a substitution clause, but the tribunal noted that this was difficult to use throughout the day and any replacement had to be approved by Excel in advance. As a result, Mr Boxer had never used a substitute;
  • Mr Boxer had no input into the arrangements between Excel and its clients and he was paid at a fixed rate for his work, which was non-negotiable and he played no part in computing the rate. His pay was communicated to him in a ''Driver Memo'', which the tribunal found to be a payslip; and
  • although Mr Boxer provided his own bicycle, mobile phone and protective clothing, Excel provided him with the radio and app to install on his personal phone. He also wore the company’s branded clothing. However he did not have to bear the cost of any damage in transit or pay insurance.

In light of this, as in the recent Uber case, the employment tribunal decided that Mr Boxer’s status should not be decided by reference what was recorded in writing, but should instead be based on how the employment contract was performed.  The tribunal also indicated that Excel was typical of a business that sought to maintain an appearance of operatives working for the business, whilst simultaneously wishing to distance itself from the burden of engaging such individuals as workers.  Mr Boxer was in fact a worker and he should be entitled to holiday pay.

The decision follows a string of similar rulings, all of which highlight the need for clarity around the status of those working within what has become known as the ''gig economy''.  It emphasises the willingness of the courts to look beyond the employment contract that exists between the parties and examine the reality of the parties' relationship.  Here, the claimant was clearly under the direction of another and not working as an independent contractor running his own business.  This, accompanied by the requirement for a high degree of commitment to Excel, meant that the essential features of a working relationship were evidently present.

The Government has commissioned a Review  of Employment Practices in the Modern Economy, which will consider the rights and responsibilities of workers, as well as employer freedoms and obligations in light of recent developments. The Report is expected to be published this summer and we will keep you up to date with any developments.

Mr A Boxer v Excel Group Services Ltd (in liquidation), Case Number 3200365/2016