Employment Law Case Update: Leyland and others v Hermes Parcelnet Ltd
Much has been reported on the ‘gig economy’ and its effect on employment law regarding worker status. The classification of whether a person is an ‘employee’, ‘self-employed’, or a ‘worker’ can have large ramifications for both the person and the organisation.
In the latest case, 65 delivery couriers (50 of whom were former couriers) brought claims to the Employment Tribunal (ET) against delivery company Hermes. Hermes failed to classify its couriers as workers, meaning they wouldn’t receive statutory benefits such as holiday pay, National Minimum Wage, pensions, maternity/paternity pay, or protection from unfair dismissal, discrimination and redundancy.
In response, Hermes argued that their delivery couriers were self-employed, with the relationship consisting of a contract for services, rather than a contract of services. If the couriers were to succeed, they would receive rights such as payment of the National Minimum Wage, holiday, and the ability to reclaim past unlawful deductions from wages.
This could be an expensive matter for Hermes, with approximately 14,500 couriers engaged under similar contracts.
There were three key matters the ET looked at when considering whether to classify the couriers as workers:
- The couriers were under an obligation to personally perform their duties. The work was carried out on behalf of Hermes and not for their own business.
- Although the couriers had the right to substitute someone else to perform the services, Hermes had control over who was appointed; and the courier was under an obligation to ensure that the substitute carried out the work to the same standard.
- The ability to negotiate pay was very limited – and only done in exceptional circumstances.
Considering all of the above, the ET found that the couriers were wrongly classified in their contracts as ‘self-employed’ and ought to have been classified as ‘workers’ – thus making them entitled to payment of the National Minimum Wage, holiday, the ability to reclaim past unlawful deduction from their wages, and other statutory rights.
In addition to recent cases with Pimlico Plumbers, Deliveroo and Addison Lee, this is yet another blow for large employers in the ‘gig economy’ who incorrectly classified their workers as ‘self-employed.’ Tribunals are now attempting to understand the reality of the employment relationship between both parties before making their decision. Whilst each case will be judged on its own facts, it’s important for employers to ensure they are clear on those who are ‘employees’, those who are ‘workers’, and those who are ‘self-employed’.
This article is from our weekly Employment Law Newsletter published on 30/08/2018. If you would like to receive this newsletter directly and be kept up to date with recent cases and Employment Law news, email email@example.com.
This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.