The distinction between ‘workers’ and ‘independent contractors’ has been a source of controversy and concern for many firms in recent years due to a number of cases in which individuals with contracts indicating they were self-employed later sought to claim they were workers and entitled to the associated rights, including a right to paid holiday.
A ruling of the Court of Justice of the European Union (CJEU) reiterated the existing test and gave some further clarification on how it should be applied (B v Yodel Delivery Network Ltd).
The case concerned a neighbourhood courier who provided his services exclusively to a UK-wide parcel delivery company. In Employment Tribunal (ET) proceedings, he alleged breaches by the company of the Working Time Directive.
That claim could only be entertained if he was a worker and, given its uncertainty as to whether he enjoyed that status, the ET sought a preliminary ruling from the CJEU.
The courier accepted that he was self-employed for tax purposes, and accounted for his own business expenses, but argued that that did not preclude him from being a worker.
His agreement with the company stated in terms that he was an independent contractor. He was not required to perform deliveries personally, was entitled to delegate his role to a suitably qualified subcontractor or substitute
He used his own vehicle to make deliveries and communicated with the company using his own mobile phone. Within certain parameters, it was for him to choose when he provided his services.
He was free to perform concurrent delivery services for third parties, including the company’s competitors. The company was not required to use his services, but he in turn enjoyed an absolute right to refuse jobs.
Giving guidance on the issue, the CJEU ruled that where there is a contract confirming an individual is self-employed, the Directive should not be interpreted to classify that person as a worker if he/she has discretion in relation to the following:
- To use contractors or substitutes to provide the services.
- To provide services to others, including competitors of the business engaging him/her.
- To decide his/her own hours of work for his/her own convenience.
- The case was sent back to the ET for resolution in the light of the CJEU’s ruling.
It is important for businesses to ensure they know the status of their staff and that if they have independent contractors working for them, that they take various steps to ensure the relationship does not operate in such a way that it could be argued those contractors are in fact workers and entitled to paid holiday and other rights.
Rest assured that we will do everything we can to help you reach the outcome you desire.
