In a continuation of the line of gig economy cases where the question is whether an individual is engaged as a worker or on a self-employed basis, five cycle couriers brought a claim against CitySprint claiming worker status and an entitlement to holiday pay (O’Eachtiarna and others v CitySprint (UK) Ltd ET/2301176/18).

In 2017, CitySprint lost a claim brought by one of its cycle couriers who was found to be engaged as a worker and was entitled to holiday pay (Dewhurst v CitySprint UK Ltd ET2202512/2016, 5 January 2017).  Where an individual has worker status for employment law purposes, they are entitled to certain employment rights, including 5.6 weeks' paid holiday per year.

As a result of that case, CitySprint introduced new written terms of engagement in November 2017, which expressly stated couriers were self-employed. In O’Eachtiarna and others, a new group of five CitySprint couriers challenged the new terms, claiming worker status and holiday pay. They argued that the new terms should be ignored because the new terms had no effect on their engagement, and nothing had changed in terms of how the work was performed. The couriers claimed that the tribunal should find that they were still workers post-November 2017.

CitySprint conceded that the cycle couriers were workers for the period before November 2017 but argued that they were not entitled to holiday pay. However, CitySprint argued that the new terms of engagement meant that the couriers were not workers after November 2017. CitySprint’s alternative argument was that the couriers had already received any holiday pay to which they were entitled because the new terms included a “rolled up holiday pay” clause which it claimed defeated any claim for holiday pay. Whilst the European Court of Justice (ECJ) has held that rolled-up holiday pay is unlawful, it has also commented that rolled-up holiday can be set off against holiday pay claims, provided that payments were made transparently and comprehensively. UK case law has established the need for a consensual agreement which identifies a specific sum or method of calculation which is attributable to holiday.

The tribunal considered (a) whether the cycle couriers were workers both before and after a variation to the terms of their contracts in November 2017, and (b) if they were found to be workers, whether they could claim unpaid holiday as far back as the commencement of their engagement with CitySprint.

The new terms of engagement

The new terms of engagement were labelled as a ‘revised cycle courier tender’ and clearly aimed to make it clear that the couriers were engaged on a self-employed basis and not as workers. The new terms were made available online to all the couriers together with a series of questions headed ‘Questionnaire’, which had to be answered in the affirmative. The questions that had to be ticked included:

  • “I am engaged on a self-employed basis and have to account for my own tax, National Insurance and VAT if applicable
  • I am under no obligation to provide my services and City Sprint UK Ltd is under no obligation to give me any work at any time
  • I can send a substitute in my place to do my work, so long as they can do the same work I have agreed to do
  • If I do not work, I will not get paid. As a self-employed contractor I will not be entitled to holiday, sick, maternity payments or any employee benefits.”
  • A clear acknowledgment that there was no obligation to provide or accept any work
  • Express confirmation that the couriers could work at the same time with or for another courier company or any other business doing the same thing or something different and could advertise their availability to do other work whenever they wanted.
  • A rolled-up holiday pay clause stating that any fees paid would be deemed to include holiday pay at the minimum statutory rate if the couriers became entitled to this.
  • A detailed substitution clause with a view to reducing the requirement for personal service. CitySprint required substitute couriers to be registered with CitySprint and to have a clean relevant criminal record, suitable insurance cover, have received the necessary equipment and health and safety training where necessary. CitySprint stated that the courier could register as many substitutes as they wanted to and, once registered, could give their City Trakker device to their substitute without notice to CitySprint. The new terms confirmed that if the courier sent a substitute in their place, they must pay the substitute themselves – the substitute would not have any contractual or financial relationship with CitySprint, and the courier would remain liable for the actions of their substitute.
  • However, in around December 2017 a document was prepared by a manager at CitySprint which gave further information about the opportunities for substitution, including introducing the prospect of unregistered substitutes. This document is inconsistent with the November 2017 terms. The documents were sent to cycle couriers in February 2018. The judgment notes that the manager who drafted these documents had the van courier’s contract in mind whereas the documents applied to both van and cycle couriers. Therefore, whilst CitySprint had sought to make substitution easier, the February 2018 documents “muddled the position both contractually and practically”.

 The decision

The tribunal considered that the new terms of engagement reflected the reality of the employment relationship and were clear. However, the couriers were held to be workers for the following key reasons:

  • The tribunal heard that the right of substitution was a theoretical right only and that no cycle courier had ever exercised the right, with one commenting ‘even on paper if could do it, felt it would be mayhem in reality.’ The judgment notes that “neither party to the contract seriously expected it to be exercised in practice”. The dominant feature of the contract remained personal performance which was key.
  • There were other features of the relationship in practice that indicated a degree of integration into CitySprint’s operation (e.g. controllers keeping records of courier availability and working time) and a degree of control (e.g. the cycle couriers having to call in for instruction) both of which can indicate a requirement of personal performance.
  • While the tribunal found that the claimants had genuine flexibility as to their working patterns, there was a general expectation by both parties that couriers were available to accept jobs and would perform them personally until they signed off at the end of the day (and were asked to inform the office at that point). If they did not want to accept a job, they had an obligation to inform the controller.
  • While the terms of engagement allowed the couriers to perform work elsewhere, most of the couriers did not provide their services elsewhere or market themselves as such. There was no sense of them being in business on their own account. Therefore, even after November 2017, when working ‘on the circuit’, the couriers were workers and were entitled to holiday.

The tribunal held that CitySprint had failed to specify a sum attributable for holiday pay or period or set out a method of calculation. Whilst the rolled-up holiday pay clause was consensual, it was not sufficiently transparent or comprehensive to satisfy the requirements for a valid rolled up holiday clause.

Comment

It is clear that the 2017 CitySprint terms of engagement represented a valid written contract which expressly excluded any requirement for personal service. However, as with the Uber decision, courts are willing to look past written terms of engagement which provide for self-employed status and will focus instead on how the relationship works in reality.