In Addison Lee Ltd v Gascoigne, the EAT upheld the decision of an employment tribunal that a cycle courier was a worker and so entitled to paid annual leave.

Mr Gascoigne worked as a cycle courier for Addison Lee Ltd for nine years. His contract described him as an independent contractor. It stated that there was no obligation on the company to offer him work and no obligation for him to accept work when offered but that that he would be deemed to be available for work when he was logged into the company palmtop computer or app.

Mr Gascoigne brought a claim for holiday pay to an employment tribunal. The tribunal had to determine whether he was a worker and so entitled to paid annual leave. The tribunal found that the employment contract did not reflect the reality of the situation and that he was a worker rather than a self-employed contractor. This was because he was obliged to perform work personally for the company and was under its control. He was not in business on his own account but carried out work for wages. The tribunal found that, while logged into the app, there was a contract in place with mutuality of obligation: the company was obliged to provide work and the courier to accept it during logged in periods.

The EAT agreed. It stated that the question of whether there was mutuality of obligation was one of fact and that the tribunal had correctly concluded from its factual findings that a contract existed with the necessary mutuality of obligation while Mr Gascoigne was logged in to the app. Importantly, the tribunal found that there was no right to send a substitute when the courier was unable or unwilling to perform the work. Addison Lee couriers had to pass criminal record checks and so they had to perform the work personally.

Employers should be aware that a so-called self-employed contractor or consultant may be found by a tribunal in reality to be a worker, giving rise to employment rights such as holiday leave and pay, limits on working time and minimum rest breaks, the National Minimum Wage and pension autoenrollment. There will also be PAYE and NICs obligations where worker status is found for tax purposes. HMRC provides an online tool to assist employers in determining employment status.

In some cases, the "contractor" may be found to be an employee where there is a high degree of control by the employer, the employee is integrated into the business and there is an obligation to provide and accept work. In such cases, further rights will apply, such as statutory notice, statutory redundancy pay and the right to bring an unfair dismissal claim.

A true contractor will be in a client/customer relationship with the company, have bargaining power in the relationship and have an almost unlimited right to send someone else to perform the work.

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.