The European Court of Justice has given some important new guidance on how to draw the dividing line between a worker and a self-employed contractor in claims seeking to assert workers’ rights such as holiday pay.
A Yodel parcel delivery courier claimed that he was a worker for the purposes of the Working Time Directive. Yodel classified the couriers as “self-employed independent contractors”. He was required to deliver within a certain time window and was entitled to subcontract the work, but had not exercised his right to do so.
The Watford Employment Tribunal referred to the European Court stating that the status of worker in UK law required the work or services to be performed personally and that this was incompatible with Article 2 the Working Time Directive which states:
" 'working time' means any period during which the worker is working, at the employer’s disposal and carrying out his activity or duties, in accordance with national laws and/or practice”.
The issue arose because Yodel couriers had the right to provide services to several customers simultaneously. Yodel argued that they were precluded from being a worker in UK law because they could subcontract tasks and were not required to provide their services exclusively to Yodel. This meant, Yodel said, that they must be classified, in accordance with the law of the UK as “self-employed independent contractors”.
Although the European Court did not rule on the classification, as it is a matter for the Watford Employment Tribunal taking into account this preliminary ruling, it stated that the Working Time Directive must be interpreted as precluding a person from being a worker where that person has the discretion:
- "to use subcontractors or substitutes to perform the service which he has undertaken to provide;
- to accept or not accept the various tasks offered by his putative employer, or unilaterally set the maximum number of those tasks;
- to provide his services to any third party, including direct competitors of the putative employer, and
- to fix his own hours of ‘work’ within certain parameters and to tailor his time to suit his personal convenience rather than solely the interests of the putative employer,
provided that, first, the independence of that person does not appear to be fictitious and, second, it is not possible to establish the existence of a relationship of subordination between that person and his putative employer.”
This ruling provides a helpful reminder of the factors that a Court should consider when classifying worker status for the purpose of claims for the associated rights. It reiterates that the right to substitution, even if not exercised, is important. It is, however, worth remembering that this is not a "get out of jail" card and a simple insertion of a substitution clause into the agreement will not be sufficient. Interestingly, this ruling does not suggest that the discretion it lists must have been exercised to evidence that it was not fictitious. It will not be straightforward for any Employment Tribunal or employer to test whether it is genuine if it has not been exercised when either seek to determine status.
For more information about employment status and the Good Work Plan see our recent article here.