The 'realistic and worldly wise' approach to worker status?

The recent Employment Appeal Tribunal ruling in Addison Lee v Lange, in which the minicab firm had wrongly classed its drivers as self-employed, signals another blow to the gig economy.

Mr Lange and his two colleagues each entered into a contract to hire a vehicle in Addison Lee’s livery from an associated company. The drivers were provided with training and a regular flow of jobs. They were issued a hand-held computer known as an XDA, which they logged into and through which work was assigned to them automatically according to their location. Once a job was assigned, they were expected to accept it straightaway. If a job was refused, they had to give a valid reason for the refusal and could face a sanction. Their contractual documents with Addison Lee, however, described them as independent contractors.

Both the initial tribunal and the Employment Appeal Tribunal (EAT) held that the drivers accepted an obligation to undertake the driving jobs allocated to them when logged onto the XDA and that a ‘realistic and worldly wise’ approach to the contractual documents was that they did not reflect the reality of the parties’ working arrangements. The drivers were workers of Addison Lee, not just when logged on (as in the well-known Uber case), but in a general overarching contract, each side having invested in the other which in practice created an obligation of working together. When logged on, they were “working” so as to earn the National Minimum Wage.

In both this case and the Uber case, the EAT held that the apparent lack of obligation in the workers' contracts contradicted the reality of the companies’ business models. It could not be said that the drivers were independent businesses with Addison Lee as their client.

From the several gig economy courier and driver cases heard over the last two and a half years, the following clear trends have emerged:

•  the reality of the working relationship is as important a consideration as the written contract;
•  an individual must perform services personally to be a worker; if an individual is free to appoint a “substitute” to carry out their duties, as in the Deliveroo union recognition case, they are likely to be found not to be workers;
•  in cases such as Uber and Addison Lee, the drivers are not in partnership with the company as a genuine self-employed business. They cannot negotiate the terms imposed on them and they have a personal obligation to accept work in a manner controlled by the company once the app is switched on.
  
  

This is the latest in a line of cases on the issue of employment status and is a clear reflection of the ‘direction of travel’.