WORKER STATUS, GIG ECONOMY AND SUBSTITUTION (29 April 2020)
The European Court of Justice (ECJ) has handed down an important decision providing commentary on the factors that may render a person to be a self- employed contractor rather than a worker.
The case was brought by way of a reference from the Watford Employment Tribunal for a preliminary ruling on the definition of what constitutes a ‘worker’ under the Working Time Directive.
The process of preliminary rulings allows national courts to put question to the ECJ which includes to clarify the interpretation of the EU Treaties, an EU law or of a national law based on or derived from EU law. The purpose of a reference is to try to ensure a uniform application of EU law throughout the European Union.
Summary of Facts
D was a courier engaged in delivering parcels under a service agreement with Yodel. The terms of that agreement included that D could:
- use subcontractors or substitutes to perform the service which he had undertaken to provide;
- accept or not accept the various tasks offered by Yodel, or unilaterally set the maximum number of those tasks;
- provide his services to any third party, including direct competitors of Yodel, and
- fix his own hours of ‘work’ within certain parameters and could tailor his time to suit his personal convenience rather than solely the interests of Yodel.
The ECJ considered that the above 4 factors the ECJ and provided a strong indication that D was not a worker, but self employed. The ECJ found that the independence of D did not appear to be fictitious. In other words, the terms of the Service Agreement reflected the reality of the situation. It is found that it was not possible to establish the existence of a relationship of subordination between D and Yodel. The ECJ was perhaps alluding here to a lack of sufficient mutuality of obligations (i.e. in respect of the obligation to offer work and the obligation to accept work that is offered.)
However, ECJ concluded that it is for the referring court, taking account of all the relevant factors relating to that person and to the economic activity he carried on, to classify that person’s professional status under Working Time Directive.
There are a number of claims proceeding in the courts concerning the gig economy. Companies may wish to review any contracts in respect of self-employed persons to see if the above criteria reflects the reality of the situation and incorporated the wording into their contracts.
It will be interesting to see how the national courts apply this ruling.