Businesses urged to review employment practices after cycle courier wins gig economy case

CitySprint worker receives holiday pay, as employment lawyer says rulings are concerning for firms with similar business models

A tribunal has ruled that a cycle courier working for delivery firm CitySprint should be classified as a worker and receive holiday pay and the national living wage, in the latest court victory for individuals working for firms in the ‘gig economy’.

Employment lawyers urged organisations in a range of sectors to begin examining the implications of their business models, after the Central London Employment Tribunal ruled that CitySprint was wrong to classify Maggie Dewhurst as a self-employed freelancer.

Judge Joanna Wade described the firm’s contractual arrangements with Dewhurst as “contorted”, “indecipherable” and “window dressing”.

Although Friday’s ruling applies to Dewhurst specifically, it opens the door to broader action against CitySprint, which has 3,500 self-employed couriers in the UK. The Independent Workers Union of Great Britain, which backed the case, has similar hearings pending in March and April against courier companies Addison Lee, eCourier and Excel.

The case also follows the high-profile October employment tribunal victory for two Uber drivers, which could force the taxi-hailing app to offer sick pay and holiday pay to its 40,000-strong fleet of drivers. The business is appealing the verdict.

While limited in their scope and subject to appeal, these cases point to a willingness among courts to apply stringent criteria to self-employed status, a trend that has implications beyond the gig economy embodied by couriers and Uber drivers. Construction workers, chambermaids and warehouse staff are often working on comparable contracts, according to employment lawyers, as well as the growing network of self-employed delivery drivers.

The government recently announced that it would be conducting a six-month review into modern working practices and that HMRC had established a new unit to investigate companies’ use of freelance and self-employed individuals.

Anna McCaffrey, senior associate in Taylor Wessing’s employment, pensions and mobility group, said the latest ruling was “concerning” for any company that uses a large number of self-employed individuals.

“It’s not necessarily the end of the gig economy, but it does mean firms will have to review their business structures. Companies that operate using similar models to Uber and CitySprint could be facing similar claims,” she said. “They’ll need to be confident that, if they have claims brought against them, they would be able to justify why the individual has a certain status if it was challenged legally.

“Every company involved in the gig economy works in a slightly different way, so this case’s outcome isn’t applicable to all, but it is quite influential. Cases such as this one show the tension between employment law for self-employed workers and the business model used for them in practice. It’s not just about what the contract says, it’s also about what actually happens, such as how much control is exerted over self-employed workers.”

In the case of CitySprint, she added, the self-employed workers were given uniforms and were required to undergo inductions at the outset of their contract – all of which helped persuade the court that they were effectively workers similar to those on zero-hours contracts or other semi-permanent arrangements.

Paul Jennings, partner at Bates Wells Braithwaite, which represented Dewhurst during the CitySprint case, emphasised that the ruling did not mean CitySprint had to offer holiday pay across the board. But he said: “Until now, couriers have occupied a vulnerable position – they carry out physically demanding work in dangerous conditions, but cannot take paid leave. In the wake of this judgment, we expect thousands of couriers across the capital will look to assert their rights and seek back-pay.”

A spokesperson for CitySprint said the firm was “disappointed” with the ruling. “It is important to remember that this [verdict] applies to a single individual and was not a ‘test case’. We enjoy a good relationship with our fleet and have always strived to help them maximise their earnings. Evidence presented at the tribunal confirmed that the vast majority of our couriers enjoy the freedom and flexibility of the role.”

The spokesperson added that there was “widespread confusion” regarding this area of law, and called on the government to provide better support and help for businesses.

Dewhurst, who still works for CitySprint, cycles an average of 50 miles a day. She said: “This wasn’t just about me – it was about people who have been working here for 20 years without any of these rights. CitySprint argued that we weren’t part of the company, but you cannot run a £145m courier businesses without employing a single courier.”