06 Oct 2017

In another blow to the gig economy, the employment tribunal has ruled in Lange and others v Addison Lee Ltd (unreported) that a group of Addison Lee drivers were not self-employed but were workers and were therefore entitled to the national minimum wage and holiday pay. This decision is likely to affect thousands of workers at Addison Lee, as well as other companies operating in the gig economy.

Facts

The decision has not been reported yet so we do not have all the details but it appears that the claimants were a group of three drivers engaged as self-employed contractors by Addison Lee Ltd, a private hire and courier service in London. The employment tribunal (ET) heard that the drivers earned about £5 per hour as self-employed contractors. They argued, with the support of their trade union the GMB, that they should have been treated as workers, meaning that they must receive the minimum wage of £7.50 an hour plus holiday pay.

The ET heard evidence that the drivers faced fixed costs for hiring Addison Lee Ford Galaxy cars, and that their use of the vehicles was restricted and regulated. They were obliged to accept jobs once logged on to Addison Lee's system, and agreed to undertake those jobs personally. The ET was also told that drivers had to comply with a dress code and code of conduct, including asking customers their preferred route. Drivers were not permitted to "pull away" from a job without permission from Addison Lee.

Employment tribunal decision

Employment judge David Pearl held that based on the above, the suggestion that the drivers were independent contractors "defied evidential gravity". The drivers were in a subordinate position to the company, and they were not in any realistic sense contracting with Addison Lee. The ET therefore held that they had been wrongly classed as self-employed, and should have been treated as workers. This means they will be owed back pay as they are entitled to the national minimum wage and holiday pay, the amount of which will be determined at a further ET hearing.

Comment

This decision will affect the 3,800 people engaged as self-employed drivers by Addison Lee. It is estimated that the holiday pay for each worker could amount to £4,000, with wages yet to be calculated.

This is the latest blow to the gig economy following a number of similar decisions, and while it does not mean that all self-employed drivers will be entitled to workers' rights, the decisions on this matter are hard to ignore for companies operating in the gig economy and could leave them open to mass employment claims.

A number of similar cases are working their way through the courts at the moment. Uber lost an ET case brought by two drivers in October 2016. Uber's appeal was heard in the Employment Appeal Tribunal last week and a decision is awaited. CitySprint are also appealing an ET decision from January 2017 that a cycle courier was a worker rather than self-employed. Employment status claims have also been brought against delivery companies Hermes and DX, which are due to be heard early next year, and the appeal by Pimlico Plumbers Ltd in relation to the status of a plumber is waiting for a hearing date in the Supreme Court. The recent Taylor Review included a number of recommendations in relation to reform of the gig economy and we will have to wait and see how many of them are implemented by the Government.