Who and what is next in the “gig economy” litigation?

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First Uber. Then CitySprint. Who and what is next in the “gig economy” litigation? In this piece, Annie Powell, a solicitor in the employment and discrimination team at Leigh Day, examines an area of the gig-economy that’s ripe for employment status litigation…

There are more employment status cases already waiting in the wings, including claims against three more courier companies and against Deliveroo. And now that employment status is such a high profile issue, it seems likely that there will be more such claims for holiday pay and the National Minimum Wage as individuals who are classed as independent contractors see similarities in their circumstances with the Uber drivers or CitySprint couriers.

In this article I am going to focus on one particular area of the gig economy that seems ripe

Annie Powell is a solicitor in the employment and discrimination team at Leigh Day.
Annie Powell is a solicitor in the employment and discrimination team at Leigh Day.

for employment status litigation, specifically the increasing number of companies that describe themselves as online platforms, as Uber did, or as online market places.

“Platforms”

If you haven’t used these companies, you’ve probably seen their adverts. These are the companies which, for example, arrange for a cleaner, handyman (handyperson?) or massage therapist to come to your home.

Many of these companies describe themselves as being mere matching services that match you, the customer, with a “self-employed” cleaner, massage therapist etc. As such, so the companies’ argument would go, the company does not provide the cleaning/massage/handyman service at all and the cleaners/therapists/handymen do not work for the respective companies.  Instead, the only contract to work is directly between the customer and, for example, the cleaner.

The cleaners, therapists and handymen, therefore, receive no employment rights from the company.

For any worker status claim that is not underpinned by European law, such as for the National Minimum Wage, and for any claim that relies on the claimant being an employee of the company, the claimant will need to establish that there is a contract to work for the company.

In these cases a key question will therefore be whether in reality there is no contract to work between the company and the individual, or whether the company’s description of itself fails to reflect what has actually been agreed between the parties.

Uber

Uber is an example of a company whose description of itself as a matching service was rejected by the Employment Tribunal. Uber claimed that it was not a transport company at all but a mere platform that simply matches customers with drivers. As such, Uber argued, the drivers entered into contracts with each customer and had no contract to work for Uber, and their claims should therefore fail.

Uber’s argument was rejected for numerous reasons with the Tribunal finding that Uber provides a transport service and the drivers work for Uber. Here I will focus on two arguments that may be applicable to other companies that claim to be platforms.

Payment

The first is payment. Who pays the claimant in return for their work? If the company is obliged to pay the claimant for their work, there will be a contract to work between the claimant and company and the company’s ‘platform’ argument will fail.

But it often isn’t as simple as identifying the flow of money, as the Uber litigation shows. Customers pay Uber and Uber pays the drivers 75 – 80% of the value of each fare.  But Uber argued that it merely acts as a payment collection agent for the drivers, akin to Paypal, they argued, and that it was the customer who was legally responsible for paying the drivers.

Some of the ‘platform’ companies described above also take payment directly from the customer and then pay the individual therapist, for example, but claim that they do so only as an agent for the therapist.

There then needs to be an analysis of whether the parties’ have in fact entered into an agreement under which the company is a payment collection agent of the claimant.

One way to test this is to see what happens if the customer does not pay. If the company is truly just a payment collection agent, you wouldn’t expect them to pay the claimant because no money has been collected.

If the company does pay the Claimant in this scenario, the fact that it puts itself out of pocket is good evidence that there is a contractual obligation for it to do so. In the Uber litigation, the evidence showed that when there was fraudulent use of the service which meant that no payment was made, Uber would generally still pay the driver for his work. The Tribunal found that this was evidence that it was Uber who was contractually obliged to pay the drivers.

Further, Uber used to guarantee drivers a certain level of monthly income provided they carried out a minimum number of journeys. This also suggested that it was Uber who was responsible for paying the drivers, because why would a payment collection agent like Paypal guarantee a certain level of pay?

Marketing

The second factor is how a company markets itself. This unlikely to be decisive but it will provide an insight into what the company’s business actually is and what sort of contractual arrangements it is therefore likely to have entered into.

If, as in Uber’s case, you advertise yourself as providing a transport service and if you tell government committees and Transport for London that you provide transport services, it is going to be difficult to then argue that you actually only offer a platform rather than the service itself.

If the company provides the service, it will need people to carry out that service, so you are likely to find that the claimants will have a contract to work for the company.

So it’s possible that those ads you see on the tube may make their way into an Employment Tribunal judgment one day.

Finally, establishing a contract to work for the company is not the end of the story. For worker status claims Claimants will still have to show that they must personally work for the company and that the company is not a customer or client of their business or profession. These issues are well tested in the case law, but the question of whether there is a contract to work at all is likely to become an increasingly contested issue.

 

 

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