The Gig Economy: The spotlight continues to shine on giggers
Speed Read
- Pimlico Plumbers lost its appeal in the Court of Appeal recently against the decision of the UK Employment Appeals Tribunal (the EAT) which found that one of its plumbers was a 'worker' for the purposes of the relevant UK legislation. Pimlico had argued that the plumber was engaged as a contractor and therefore should not be regarded as a 'worker'.
- Despite the fact that some characteristics of the working relationship would usually be indicative of an independent contractor arrangement, the view that the plumber “was an integral part" of Pimlico’s business and that he was "subordinate to" Pimlico, ultimately led to the decision that he should be awarded 'worker' status.
- By contrast the recent Fastway Couriers case in Ireland addressing a similar issue was decided in line with previous decisions of Irish courts and tribunals and the claimant failed in his bid to assert employment status.
What were the facts?
Mr Smith worked as a plumber for Pimlico Plumbers. Mr. Smith's contract was terminated in May 2011, and he claimed that this was due to a heart attack he suffered in January 2011. He brought proceedings before the EAT claiming 1) that he was an employee, and that the EAT had jurisdiction to consider his complaints of unfair dismissal and wrongful dismissal and/or 2) that he was a 'worker' and that the EAT had jurisdiction to consider his complaints of discrimination, entitlement to holiday pay and unauthorised deductions from his wages.
Mr Smith worked as a plumber for Pimlico Plumbers. Mr. Smith's contract was terminated in May 2011, and he claimed that this was due to a heart attack he suffered in January 2011. He brought proceedings before the EAT claiming 1) that he was an employee, and that the EAT had jurisdiction to consider his complaints of unfair dismissal and wrongful dismissal and/or 2) that he was a 'worker' and that the EAT had jurisdiction to consider his complaints of discrimination, entitlement to holiday pay and unauthorised deductions from his wages.
Mr Smith's claim that he was an employee was dismissed at the Employment Tribunal. However, in line with previous recent UK decisions for Uber and CitySprint, the Court of Appeal upheld the decision of the UK EAT that Mr Smith was a 'worker', and not an independent contractor of the company. (For further information on these decisions, you can read our previous alerters here and here).
The key factors influencing the Pimlico decision are summarised below:
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- The UK Court of Appeal provided some useful commentary with respect to the ability of the individual to appoint a substitute to undertake the work. The Court noted that an unfettered right to appoint a substitute is not consistent with an undertaking to do work personally. Further, whether a conditional right to substitute another person is inconsistent with personal performance will depend on the nature and degree of any limit on that right of substitution.
- The Court was influenced by the overall level of control exerted by Pimlico over Mr Smith, despite some contractual terms which afforded him a semblance of independence (such as the requirement to provide his own equipment to carry out the work).
- The contract further imposed restrictive covenants on Mr Smith and was required to obtain Pimlico's consent if he wished to engage a substitute to carry out the services.
- Notwithstanding the fact that Mr Smith had discretion over certain elements of how he performed the work, the UK Court of Appeal upheld that the decision of the UK Employment Tribunal that he was engaged to personally provide the services to Pimlico.
- The UK Court of Appeal provided some useful commentary with respect to the ability of the individual to appoint a substitute to undertake the work. The Court noted that an unfettered right to appoint a substitute is not consistent with an undertaking to do work personally. Further, whether a conditional right to substitute another person is inconsistent with personal performance will depend on the nature and degree of any limit on that right of substitution.
Has the position in Ireland changed?
No. Despite the ongoing developments in the UK with respect to the additional employment rights being awarded to certain operators in the 'gig economy', in a recent decision of the EAT, Brosnan v Courier Post Limited T/A Fastway Couriers in Ireland, the EAT held that a delivery courier was an independent contractor, and not an employee of the courier company as asserted by the claimant.
What happened in the Fastway case?
The claimant, Mr Brosnan, worked for Fastway Couriers as a driver covering a particular geographic area. He was registered to pay VAT, had entered into a Courier Franchise Deed with Fastway Couriers and had taken legal advice prior to entering into this Deed.
The Irish EAT highlighted that "the labels that the parties ascribe to themselves are not determinative of the status of the employment relationship" and noted that there was "no precise test for determining" whether someone was engaged as an employee or an independent contractor. None of this is new law.
In reaching its decision that Mr Brosnan was an independent contractor, the EAT noted that Fastway Couriers did exert a large degree of control over Mr Brosnan, however, that "the element of control is not a decisive factor". In particular, the EAT was persuaded that the following features of the relationship favoured a non-employment relationship:
- ability to delegate
- responsibility to source a replacement during any absence
- responsibility for his own tax affairs
- requirement to have public liability insurance
- personal investment in the business
- provision of his own van for the work
- potential to profit from the contract
- freedom to sell his territory or part thereof
- payment for his mobile phone costs
- payment to Fastway Couriers for his uniform and sorting/scanning equipment
The decision in the Fastway case is not surprising and is more or less in line with previous similar decisions. It is important to remember that Ireland does not have equivalent legislation to that in the UK which allows individuals to hold the position of a 'worker' or quasi-employee and so the trends that we have been seeing in the UK do not have an exact equivalence here due to the absence of a comparable category of 'worker'.
As the momentum continues to build in the UK in this area, this decision continues to shine the spotlight on the possibility that there could be a similar shift in Ireland where the reality is that gig economy is a fast growing phenomenon. While it is difficult to determine the true size of the gig economy, recent EU studies have shown that in 2015 the gross revenue from collaborative platforms was estimated at €28 billion, almost double that of 2014.
In the Pimlico case, the Court observed that a "spotlight" is put "on a business model under which operatives are intended to appear to clients of the business as working for the business, but at the same time the business itself seeks to maintain that, as between itself and its operatives, there is a legal relationship of client or customer and independent contractor rather than employer and employee or worker". The spotlight remains firmly on the gig economy and it remains to be seen whether the current trends in Ireland will continue as more and more workers join the gig economy and at last some of them attempt to assert employment rights.
For more information please contact Rachael Evans, Solicitor, Karen Killalea, Partner or your usual contact on the A&L Goodbody employment team.
Date Published: 8 March 2017