The recent Employment Tribunal case of Mr S O'Eachtiarna and others v CitySprint (UK) Ltd acts as a reminder of the importance of written contractual terms in determining employment status.
Background
In the 2017 case of Dewhurst v CitySprint UK Ltd, a cycle courier engaged by CitySprint was found to be a worker, despite his contract describing him as a self-employed contractor. Where an individual is assigned 'worker status' for employment law purposes, they are neither employed nor self-employed, but sit between the two. Workers are entitled to certain employment rights, including 5.6 weeks' paid holiday per year. CitySprint updated their contractual terms and conditions in November 2017 following this judgment, as for the purposes of its business model it prefers couriers to be self-employed.
Mr S O'Eachtiarna and Others v CitySprint (UK) Ltd
The claimants were a group of cycle couriers who claimed to be workers both before and after their contractual terms were updated following the Dewhurst case. They argued that as workers, they were entitled to holiday pay.
The Tribunal agreed that given the Dewhurst decision, the claimants were workers prior to November 2017. It then spent time examining the nature of the contractual relationship between the parties once the contract was updated. The majority of the new terms were found to be consistent with the reality of the working relationship between CitySprint and the cycle couriers. However, personal performance was the dominant feature of the relationship, and this indicated worker status.
The Decision
The new contract did not technically require personal service. It contained a detailed substitution clause. However, in reality:
The right of substitution was theoretical and had never been exercised. Personal performance was necessary, and none of the claimants used a substitute.
The claimants had flexibility as to their working patterns. However, once they had indicated they were ready to start work, they were expected to accept instructions and perform them personally until the end of the day.
The cycle couriers did not provide courier services elsewhere or market such services to other potential clients or customers.
Taking all this into account, the Tribunal found the couriers remained workers after the contract was updated in November 2017. The Tribunal held the claimants were therefore entitled to paid holiday. Whilst a rolled-up holiday pay clause was contained in the contract, it was not sufficiently transparent and nor did it provide a mechanism for the calculation of holiday pay, so was invalid on this basis.
Best Practice
If an organisation is building a right of substitution into a contract, it is sensible to think about how that will work in practice and how it should be expressed. For example, is it an absolute right to send a substitute, or a conditional right? A conditional right is more likely to point to a worker relationship.
Tribunals will look at the relationship as a whole before determining employment status. It is often a question of weighing up competing factors. Every case is dependent on its own facts. Therefore, employers must ensure that any written contract reflects the reality of the relationship. If a court or employment tribunal suspects that a contract is a sham, it will look behind the written terms to establish the reality of the relationship.
Originally published 17 August, 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
