Cycle couriers engaged by CitySprint still workers despite a revamped contract

Five cycle couriers brought a claim against CitySprint claiming worker status and an entitlement to holiday pay in the case of O’Eachtiarna and others v CitySprint (UK) Ltd ET/2301176/18.

Background

In January 2017, the Employment Tribunal (ET) held that a cycle courier engaged by CitySprint on an earlier contract was a worker under the Employment Rights Act 1996.

In November 2017, CitySprint introduced new terms of engagement.

The new terms included substitution clauses with a view to reducing the requirement for personal service.  The couriers agreed that they could send a substitute in their place and, if they did, they must pay the substitute themselves – the substitute would not have any contractual or financial relationship with CitySprint.

The cycle couriers argued that these new terms had no practical effect on their engagement and therefore they were still workers post-November 2017.

In addition, the new terms included a rolled-up holiday pay clause stating that any fees paid would be deemed to include holiday pay at the minimum statutory rate if the cycle couriers became entitled to this.  For the period before November 2017, CitySprint conceded that the cycle couriers were workers but argued that they were not entitled to holiday pay.  For the period from November 2017 onwards, CitySprint argued that the new terms defeated any claim for holiday pay.

The cycle couriers argued that the rolled-up holiday clause was impermissible and, in any event, there had been no additional payments that were transparent and comprehensible

The ET considered the following two key questions:

  1. Whether the cycle couriers were workers both before and after the variation of their terms of engagement in November 2017; and
  2. If they were workers, whether they could claim unpaid holiday from when they started working with CitySprint.

Worker Status

The ET held that the cycle couriers were still workers even after the variation of terms.

Although the revised terms of engagement provided a contractual right of substitution, this right was held to be only a theoretical right and had never been exercised. Crucially, personal performance was still a dominant feature of the contract.

In addition, most of the cycle couriers did not provide their services as a cycle courier elsewhere or market themselves as cycle couriers. On this basis, even after the implementation of the new terms of engagement in November 2017, the cycle couriers were workers for the period they were working “on the circuit”.

Holiday Pay

Because the cycle couriers were considered workers they were entitled to holiday pay.

The ET held that the rolled-up holiday pay clause was not sufficiently transparent or comprehensive to satisfy the requirements for a valid rolled up holiday pay clause.  CitySprint should have identified, in some form of document, a specific sum referable to holiday pay or a holiday period and how this was to be calculated.

Comment

While only a first instance decision, this case highlights a common thread in recent worker status ET cases.  The parties clearly entered into a valid written contract which expressly sought to exclude any requirement for personal service.  Despite that, the substitution arrangement was defeated by the fact that the dominant feature of the work was in fact personal performance and there was no evidence of any real substitution.  The ET was not bound by the words of the contract but looked at the reality of the relationship and found the couriers were still workers.  Employers, therefore, need to be particularly careful in how they draft their contracts when engaging self-employed individuals on a regular basis.  Form does not exclude reality.  This is also true for holiday pay, as employers need to be transparent if they intend to use rolled-up holiday as way of paying its employees or workers.

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Laura Anthony

About Laura Anthony

Laura supports the team on a broad range of both contentious and non-contentious legal matters, acting for both employers and employees. Her experience includes: advising corporate bodies and senior-level individuals on a wide range of employment law issues; drafting and negotiating terms of employment contracts and consultancy agreements; advising on and negotiating settlement agreements for employers and exiting employees; reviewing and drafting employment policies and handbooks; advising employers on exiting strategies and the associated unfair and wrongful dismissal risks; and providing support on large corporate transactions.

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