Another nail in the gig economy coffin

28 September, 2017
by: Cripps Pemberton Greenish

Companies operating within the gig economy, specifically those providing minicab services, will now be forced to examine whether staff previously treated as “self-employed” are in fact “workers” and therefore entitled to greater level of employment rights.

An Employment Tribunal has found that three drivers of the London based minicab firm, Addison Lee, should be classified as workers rather than self-employed and so are entitled to the national minimum wage and holiday pay.

Facts

There was clear evidence that Addison Lee exercised day to day control over the drivers. Drivers had to adhere to procedures and systems put in place by Addison Lee, including a dress code and a code of practice that required drivers to ask customers if they had a preferred route.

Only one driver of approximately 4,000 in London drove his own car. All other drivers signed a driver contract and vehicle hire agreement for Addison Lee liveried Ford Galaxy cars – the costs of which typically took 25 – 30 hours work a week to pay off.

Whilst drivers were allowed to use the hired vehicles for private purposes, their use was monitored, restricted and regulated. Drivers ‘logged on’ to the company’s booking system when they were free and able to work, their location was tracked and jobs were sent to them. If drivers chose to decline a job, they would have to provide an acceptable reason.

The company argued that drivers were free to choose where and how they obtained a car and argued that drivers could elect to work when they wanted by choosing when to ‘log in’.

Legal argument

It was held that there was an overarching contract implied by the relationship between drivers and the company. The company expected and relied on drivers to log on, whilst the drivers had to log on to pay their fixed costs and earn an income. A contract of employment was formed as soon as a driver ‘logged on’ and began driving. The fact that drivers had to choose to log on did not diminish the drivers’ obligations under the contract.

Lessons to be learned

The gig economy now faces testing legal questions which will no doubt impact on a company’s management model. Going forward, there will no doubt be a rise in “self-employed” drivers seeking to establish their rights as “workers”; companies will need to carefully consider their contractual agreements so that workers rights are accurately reflected. Yesterday, Uber began its appeal against an employment tribunal decision made last year that the company’s drivers were workers. Regardless of Uber’s recent assertions that it is not part of the gig economy, the impact of the Addison Lee case will undoubtedly undermine Uber’s appeal against the tribunal’s decision.