Gig economy and the importance of defining an employment status

The gig economy has been a hot topic over the past few months, with large companies such as Uber and Deliveroo facing claims relating to the ‘worker’ status of those undertaking work on their behalf.

Establishing a worker’s employment status from the outset is crucial; it affects their rights, benefits and protections. It’s important to be aware that the criteria used by HMRC in comparison to that used by an employment tribunal are separate and distinct.

Stuart Delivery v Augustine – the background

In the case of Stuart Delivery v Augustine, the Court of Appeal has upheld an Employment Tribunal’s decision that a courier driver who could release a delivery slot that he had agreed to undertake to another courier, satisfied the definition of ‘worker’ under the Employment Rights Act. The right of substitution was limited enough to be consistent with personal performance.

Stuart Delivery Ltd developed a mobile app which allowed couriers to connect with clients. These couriers were able to undertake ‘ad hoc’ or ‘slot’ deliveries. In the case of slot deliveries, couriers were required to commit to being available at a specific place and time, in return for a minimum rate of £9 per hour. Couriers were able to release a ‘slot’, enabling other couriers to take it, but if no other courier accepted such a slot, the original courier was liable for completing any delivery.

The argument and decision

Stuart Delivery Ltd argued that the claimant did not satisfy the definition of a worker, however the tribunal found that the release procedure did not amount to an unfettered right of substitution, since a courier would only be released from their obligation to undertake the delivery if another courier took the slot, and the original courier had no control on whether this happened.

The tribunal viewed that this was in the fifth category of substitution identified by Sir Terrence Etheron in Pimlico Plumbers Ltd and anor v Smith, i.e. ‘a right to substitute only with the consent of another person who has an absolute and unqualified discretion to withhold consent’. The tribunal also held that SD Ltd was not a client of any business run by the claimant. On appeal, the tribunals analysis was upheld.

What does this outcome mean?

This confirms that the issue a tribunal must establish is whether a claimant is under an obligation personally to perform the work or provide the services.

Businesses who rely on platforms in the gig economy should ensure that they are not caught out by similar measures leading to individuals being deemed workers.

It is important to identify the correct worker status from the outset of employment to avoid such claims. You should also consider how the status of the individuals working for you, whether as self-employed freelancers, workers or employees, affects your business.

How Moore Barlow can help

If you require expert legal advice on this subject or any other employment related topics, please contact us today.