What gig economy legal cases mean for procurement

posted by Phil Allen
19 May 2017

Logistics firm, CitySprint, has become the latest business to face a high profile legal challenge arising from the so-called ‘gig economy’.

The Employment Tribunal ruling, which went against CitySprint, holds lessons for logistics operators with similar employment practices. However, it also begs the question as to whether the gig economy is shaping up to be a major ethical and reputational quandary for UK supply chains.

In the case (Dewhurst v CitySprint) the tribunal ruled that a cycle courier (Ms Dewhurst) was wrongly classed as self-employed and therefore entitled to claim certain rights and benefits – such as holiday pay.   

CitySprint argued that Ms Dewhurst was self-employed, citing a contract she had signed – stating that she was an independent contractor – and the invoices she had issued for her work as evidence. However, in analysing the detail of her working life, the tribunal decided it was clear that her activities were closely directed by CitySprint. This included being in constant contact with a control room which dictated her movements. Crucially, the tribunal found that Ms Dewhurst was not only working when she was carrying out deliveries, but that her waiting time in between jobs counted too. As such, it ruled that she was clearly engaged by the business as a worker and entitled to holiday pay.

As with the similar, successful claim brought by drivers working for taxi business Uber, Ms Dewhurst was only claiming she was a ‘worker’, which is a wider test than that for being an ‘employee’ and not inconsistent with what she had told HMRC.

CitySprint received particular criticism from the tribunal judge for the ‘indecipherable’ nature of Ms Dewhurst’s contract, stating that she could not have been expected to understand the complex legal phrasing used.   

Given the popularity of flexible labour in many supply chains, this ruling serves as a clear warning that if a business has wrongly classified someone as self-employed, they may face additional, unexpected costs and legal challenges in the future.

But it also raises a broader question for those at the top of supply chains.

When taken alongside the high profile Uber case, it is a clear sign that challenges to assert worker rights are gathering momentum in the UK and will attract media and political scrutiny.

With that comes an inherent reputational threat. As many supply chain partners carry out customer-facing work on behalf of businesses, scandals arising from their employment practices have the potential to damage their clients’ reputations also. This is particularly the case because one of the government’s current responses to such breaches of worker rights is to ‘name and shame’ the businesses in question in the same way it does for failures to pay the minimum wage.

For those involved in procurement, there is a question about how far to go in imposing requirements on supply chain partners’ engagement of their workers, and whether to do so at all. If public and political pressure can damage everyone’s reputation, this may lead to a wish to require greater transparency about worker engagement and potentially better employment practices from partners. It seems highly likely that the gig economy will continue to be a driver of high profile disputes for some time.

In response, businesses must be confident that how they categorise individuals who work for them is correct and that their contracts and other documents do not expose them or their clients to criticism or risk.

☛ Phil Allen is a partner in the Employment Pensions and Immigration Team at law firm Weightmans.

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