ECJ provides directions on determining a ‘worker’ for the purposes of the Working Time Regulations

Court identifies significant factors for a tribunal to consider when determining employment status.

Determining the precise nature of the relationship between individuals and the organisation they work for is a particularly tricky area of employment law.  In part this is because definitions provided in law are open to interpretation and different laws protect different intersecting groups of individuals. This is complicated further where some of the laws describing a worker are based on an underlying European Directive.

For example, a ‘worker’ is defined in several places in UK legislation, including the Employment Rights Act 1996 (ERA 1996) and Working Time Regulations 1998 (WTR).  The ERA1996 is entirely a work of domestic legislation, but the WTR transposes into UK law various protections and rights for workers and employees derived from the EU Working Time Directive (WTD).  Because there are differences between the definition of ‘worker’ in the WTR and the concept of ‘worker’ status in EU case law, it can be difficult to precisely identify who qualifies for the rights and protections granted under the WTR.

In a recent case, an individual brought tribunal claims under the WTR against a courier business, which led to a referral to the European Court of Justice (ECJ) for clarification on the definition of ‘worker’ for the purposes of the WTD and WTR.

Case: B v Yodel Delivery Network Limited

B worked as a parcel delivery courier for Yodel under a courier services agreement which stipulated he was a self-employed independent contractor.  Under this arrangement, B used his own vehicle to make deliveries and his own mobile phone to communicate with Yodel.  B was not required to deliver parcels personally and he was able to substitute someone else to do the work, although Yodel retained the right to veto the substitute if they did not have the adequate level of skill and qualification for the job.  B remained personally liable for any acts or omissions of any substitute.

The services agreement allowed B to work for other delivery services (including rivals), stated that Yodel was under no obligation to provide work and that B was not required to accept any parcel for delivery.  B was required to deliver the parcels he had accepted to deliver for Yodel between the hours of 7.30 am and 9 pm. B was able to choose the time of delivery of each parcel and their order of delivery to suit him, subject to any fixed time delivery requirements.  B received a fixed rate of pay, which varied depending on the place of delivery of each parcel.

B brought claims under the WTR against Yodel and the question arose whether he was a ‘worker’ for the purposes of the WTR and the WTD.  In particular, the tribunal asked several questions of the ECJ to ascertain whether the interpretation of the WTR by UK courts is compatible with EU law.

The ECJ noted that a ‘worker’ is not defined in the WTD, but that the ECJ has ruled upon the concept.  Referring to EU case law, the ECJ highlighted that the essential feature of an employment relationship for WTD purposes is when a person performs services for and under the direction of another in return for pay.  The fact that a person might be classified as an ‘independent contractor’ under any national law did not prevent that person being classified as an employee under EU law if his or her independence was merely a legal fiction created to disguise the employment relationship.  In contrast, an individual who had the ability to choose the type of work and tasks they performed, the way in which work or tasks were performed, the time and place of work, and the freedom to recruit their own staff were features typical of an independent contractor for the purposes of the WTD.

Applying this specifically to the case at hand, the ECJ noted that B had significant freedom in relation to how he worked for Yodel. However, it was for the tribunal to examine the consequences of this freedom and consider whether, despite the discretion afforded to him, B’s independence was not merely hypothetical.  The ECJ noted that the tribunal would also need to ascertain whether a subordinate relationship existed between B and Yodel.

The ECJ made clear that an individual will not be a worker if they:

• are genuinely independent;
• are not in a subordinate relationship with their client; and
• have discretion to:
  • use subcontractors or substitutes to perform the service;
  • accept or not accept the various tasks offered by the client;
  • provide services to any third party, including direct competitors of the client; and
  • fix their own hours of work within certain parameters.

Having regard for those factors the ECJ indicated that, based on the documentary evidence, B’s independence did not appear to be fictitious and that there did not appear to be a relationship of subordination.  However, it will be for the employment tribunal to make the final determination on the facts.

Conclusion

Although the Brexit deadline is pending, the guidance from the ECJ in this case on the definition of worker will continue to apply specifically in relation to the protections and rights of workers under the WTR.  In particular, this means the case is of most interest to claims relating to rules on working hours and rest periods (including the maximum 48 hour working week) and holiday pay.

As with all cases concerning employment status, caution is advised as these cases are all fact-specific and so it is difficult to apply the decision to wider situations, but the issues highlighted by the ECJ will be familiar to those who have followed employment status case law. In addition, the ECJ mirrored UK courts and tribunals’ emphasis on the need to look behind the stated relationship laid out in any contractual documentation and consider the real world effect of those terms and conditions to determine whether the key issues of freedom and flexibility are borne out or if they were merely hypothetical.