United States: Worker Or Self-employed? Changing Contract Terms May Be Relevant

As everyone is aware, there has been and continues to be a line of "Gig economy" cases where the question is whether an individual is engaged as a worker or on a self-employed basis. One such line of cases has related to courier firms, including CitySprint. In 2017, CitySprint lost a claim brought by one of its cycle couriers who was found to be engaged as a worker and so entitled to holiday pay. As a result of that finding, CitySprint put in place a new set of written terms designed to make clear that their couriers were engaged on a self-employed basis and not as workers. E.g., there was a clear acknowledgement that there was no obligation to provide or accept any work, and a clause under which the couriers could provide a substitute.

A new group of CitySprint couriers nonetheless challenged the new terms, once again claiming worker status and holiday pay. They argued that the new terms should simply be ignored because nothing had changed on the ground in terms of how the work was performed. The tribunal disagreed. The new terms were not a sham and could not simply be ignored. They were a core factor to be analysed in the worker/self-employment test. Nonetheless, having analysed the terms, the tribunal judge came to the same conclusion as in 2017, namely that the couriers were engaged as workers. There was significant focus on the right to provide a substitute but, ultimately, the judge concluded that this was a theoretical right that would never realistically be exercised. Interestingly, this was despite the fact that CitySprint allowed the couriers to use unregistered riders (rather than pre-registered riders) to perform their jobs.

CitySprint's alternative argument was that the couriers had already received any holiday pay to which they were entitled because the new terms included a "rolled up holiday pay" clause – i.e. a clause stating that payments received by the couriers would be deemed to include any holiday pay to which they were entitled. The judge said that, while a rolled up holiday pay clause might be effective, it needed to be drafted sufficiently clearly in order for it to work. Here, that was not the case: there was no amount specified as referable to the holiday pay or the holiday pay period, and no formula set out under which the amount would be calculated.

With some similarities to the Uber litigation, we can see the courts here willing to look past a carefully drafted set of terms providing for self-employed status and focusing instead on how the relationship works in practice. In the end, the judge concluded that the dominant feature of the CitySprint contract remained personal performance by the couriers and there was no sense in which they were in business on their own account. Although they earned other income elsewhere, that was not as a cycle courier for other firms.

Originally published 18 August, 2020

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