CitySprint is one of a number of companies that have been on the receiving end of claims by couriers that they are "workers" and not self-employed. One of their cycle couriers, Maggie Dewhurst, won a well-publicised case against the company in 2017. In that case the tribunal found that the written terms between the parties did not reflect the true relationship between them, and that it was necessary to look at the reality of the situation. This prompted CitySprint to update their contractual terms in November 2017 to try to ensure similar claims would not be successful in the future. Then in 2018 the Supreme Court in Pimlico Ltd & Another v Smith held that a plumber was a worker and not self-employed on the basis that he was required to work personally for Pimlico Ltd and was not in business on his own account with Pimlico as his client.
In O'Eachtiarna & Others v CitySprint (UK) Ltd a group of couriers claimed they were workers both before and after the contractual terms were updated, claiming they were entitled to holiday pay. The employment tribunal agreed that, in light of the decision in Dewhurst, the claimants would be workers prior to November 2017 - CitySprint had in fact conceded this point. They then went on to consider the position post November 2017 under the updated terms and conditions, which expressly did not require personal service. The tribunal found that the majority of the new terms were consistent with the reality of the working relationship between the parties. However, the lengthy substitution clause contained a conditional right to engage pre-registered substitutes. The concept of unregistered substitutes was subsequently introduced which the tribunal found "muddled" the contractual position. There was also a default assumption that the couriers would accept jobs until they signed off at the end of the day - if they did not want to accept jobs then it was up to them to let the control room know.
Following the Supreme Court judgment in Pimlico, the tribunal considered whether personal service was required or whether CitySprint was in fact a client or customer of the couriers. The claimants' evidence had been that using a substitute was not practical or financially worthwhile and the tribunal found it to be theoretical, with the reality being that personal performance remained the dominant feature of the contract. Further, on the facts, it could not reasonably be concluded that the couriers carried out a business or profession of which CitySprint was a client or customer. Accordingly, the couriers were workers under the updated terms and conditions as well as prior to them being introduced in November 2017.
The conclusion that the couriers were workers meant they were entitled to holiday pay. A statement in the updated terms that any fees paid would be deemed to include holiday pay was held not to be transparent and comprehensive enough to be effective. The terms should have identified a specific sum as holiday pay and provided a mechanism for its calculation. As this was a case where the workers had not been permitted to take annual leave, the usual two year backstop for an unlawful deductions from wages claim will not apply. In addition, as this was a test case for a larger cohort of couriers, CitySprint may face a considerable financial outlay should they choose to settle the claims.
Employers should take heed of the fact that changing contractual terms alone will not defeat a claim of worker status unless the reality of the working arrangements also changes. The tribunal will look behind what is said in the contract and establish what happens in reality. The case should also serve as a warning to employers of the risk of relying on rolled up holiday pay as a way to attempt to limit liability in holiday pay claims.
