News & Insights

Status quo for workers?

Jackie Denham considers whether couriers are considered workers or self-employed independent contractors?

 Individuals classed as ‘workers’ benefit from some statutory employment rights, whereas ‘independent contractors’ (those who are self-employed) get very limited legal protection.  For instance, the rights enshrined in the Working Time Regulations 1998 (WTR) such as limits on weekly working hours; entitlement to certain rest periods and breaks; and minimum amounts of paid leave apply to workers but not to independent contractors.

In borderline cases (such as couriers), it can be difficult to draw a distinction between these categories.  In practice, the Employment Tribunal (ET) will examine the actual nature of relationship between an individual and employer in order to determine employment status.  Generally, ‘workers’ are obliged to do work personally and they are not in business on their own account, i.e. they are not running a business where the other party to the contract is a client or customer of that business.

Recently the ET made a reference to the European Court of Justice (ECJ) regarding the determination of employment status when B, a Yodel courier, claimed that he should be classified as a ‘worker’ and receive the protections under WTR.  B was engaged as an independent contractor.  Under B’s contract, he was not obligated to render services personally (i.e. he could send a substitute), he was free to decide whether or not to accept work, he was free to perform similar services to third parties and he was free to determine the hours of delivery within the framework of certain conditions.

The ECJ reiterated a well-established test regarding determination of employment status.  Firstly, the key feature of an employment relationship is the fact that for a certain period of time a person performs services for and under the direction of another person in return for a remuneration. Secondly, that the classification of an ‘independent contractor’ under national law does not prevent that person being classified as a ‘worker’ if their independence is fictitious, thereby disguising an employment relationship.  The ECJ therefore concluded that B did not have a ‘worker’ status because his independence was not fictitious and that there was little subordination.  Notwithstanding the ECJ ruling, it will be for the ET to make the final determination.

We shall keep you updated with any development that will follow as a result of the ECJ ruling.  In the meantime, companies should consider carefully the status of their workers and contractors and ensure they have appropriate contracts in place which reflect the actual relationship between the parties.