CJEU provide clarity on worker status in latest holiday pay dispute

• On 22 April 2020, the Court of Justice of the European Union (‘CJEU’) issued a decision in the worker status case of B v Yodel Delivery Network Ltd C-692/19.
• B is a courier for Yodel Deliver Network Ltd (‘Yodel’) and made a claim for holiday pay.
• B’s contract states that there is a degree of flexibility over his working hours and he is able to perform work for third parties if he wishes, including competitors of Yodel.
• It also states B is able to sub-contract work or use a substitute, so long as any substitute is suitably qualified to do the work.
• Due to Yodel’s service agreement stating that B is in fact a self-employed independent contractor, they disallowed B’s claim for holiday pay.
• B brought a Tribunal claim that he had worker status.
• The Employment Tribunal (ET) considered that the right of substitution contradicted worker status as the status of a ‘worker’ would normally involve an individual performing a personal service.
• Additionally, B’s ability to perform duties for competitors and third parties whilst simultaneously working for Yodel contradicted ‘worker’ status.
• However, the ET was concerned that UK interpretation of law may be incompatible with the Working Time Directive (‘WTD’).
• The ET decided to stay the proceedings and to refer to the CJEU for a preliminary ruling.
• In particular, the ET questioned whether the WTD requires an individual to undertake or perform all of the work or services required of him “personally” in order to fall within the scope of the WTD.
• The CJEU considered Yodel’s terms of engagement, which B claimed to never have signed, which established the right to substitute, work for competitors/third parties and have a substantial degree of flexibility.
• The CJEU noted that the WTD does not define the concept of ‘worker’ but that the Court has previously held that the concept has an autonomous meaning specific to EU law.
• The CJEU stated that an employment relationship naturally assumes a hierarchical relationship between a worker and his employer, in which the worker is junior to his employer. An independent contractor can be a worker if their independence is fictitious.
• The CJEU concluded:

‘In the light of all those factors, first, the independence of a courier, such as that at issue in the main proceedings, does not appear to be fictitious and, second, there does not appear, a priori, to be a relationship of subordination between him and his putative employer. However, it is for the referring court, taking account of all the relevant factors relating to that person and to the economic activity he carries on, to classify that person’s professional status under Directive 2003/88’.

• Watford Employment Tribunal, as the referring court, will now need to consider the CJEU’s conclusions in order to reach a determination on the employment status of B.

Aspire Comment

Although we are yet to find out how the ET will interpret this ruling, this case has been useful in understanding what should be considered a ‘worker’ status under EU law. It also demonstrates the complexity between EU and national law.

It is vital that contractors are clear of their employment status and documentation is clearly understood and signed in order to avoid any disputes or claims for employee or worker statutory rights. This will also apply for the implementation of the off-payroll working rules in April 2021. Using HMRC’s Check Employment Status for Tax (CEST) tool will provide a determination in terms of employment status which you can rely upon and can be used as evidence in the event of a dispute (provided the information input was correct). Both Contractors and Employers can complete the tool.

If you need any support on IR35, due diligence or any other employment matters, call us today on 0121 445 6178 or email enquire@aspirepartnership.co.uk.