Gig economy holiday appeal could spark many more backdated pay claims, experts warn

Commentators say upcoming case has the potential to ‘send shockwaves’ through the temporary labour market, highlighting the importance of getting employment status right

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A tribunal appeal case whereby gig economy couriers have pursued claims for unlimited backdated holiday pay has the potential to open up many more cases and “change the face of workers’ rights”, experts have said.

Represented by the Independent Workers’ Union of Great Britain, 45 self-employed medical couriers have been given the green light to follow up on their claim for backdated holiday pay from The Doctors Laboratory (TDL), which for some would date back to 1999.

In an initial 2018 employment tribunal, the couriers argued their working relationship with TDL was more ‘worker’ than ‘self employed’, meaning they should receive annual leave payments, and as such they sought backdated holiday pay for their entire engagement with the company. While this worker status was not recognised at the tribunal, the couriers did win backdated holiday pay stretching back two years.

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However, the couriers’ appeal was delayed until the judgment in the landmark Smith v Pimlico Plumbers case, which in 2022 determined that, providing that a claim for holiday pay was made within three months of termination of an engagement, the worker was entitled to retrospective unpaid leave.

This was after an initial 2012 tribunal found that Smith was a worker and as such protected against unlawful deductions from wages. Supreme Court justices ruled the same in 2018,  sparking calls for better gig economy regulation.

With the 2022 judgment now a precedent in case law, the medical couriers versus TDL case will be reheard at a new employment tribunal with the Smith v Pimlico Plumbers determination factored in.

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Experts have recognised that the upcoming couriers’ appeal could help to clarify the distinction between worker and self employed, and have warned employers to ensure they get the status right for all employees. 

Seb Maley, CEO at Qdos, said the case shines a light on the importance of businesses getting this correct, but added that it should not make businesses unnecessarily conservative in their assessments: “Employment status decisions should be made based on facts and the reality of the engagement – not the implications of engaging a self-employed individual, a worker or an employee.”

Similarly, Karen Holden, managing director at A City Law Firm, said the ruling should make HR and employers more aware of what is involved in making status decisions. “HR and business have an onus on them, whether they pay an individual through payroll or not, and must determine if an individual is entitled to employment rights and benefits,” she said.

“There has long been a legal consideration between when a worker is an employee or self employed. It is a minefield and employers need to carefully assess practices, terms, laws and tax rules.”

Julia Kermode, founder of IWORK, said the case had the potential to “send shockwaves” through the temporary labour market, leading to 1.6 million temporary workers receiving vast amounts of “missing holiday pay”.

“Tens, if not hundreds, of millions of pounds worth of holiday pay is unclaimed yearly,” she said.

“Gig platforms and organisations facilitating false self employment should be very worried about the potential cost to their business if current and previously engaged temps put forward their rightful claim to receive backdated holiday pay.”

Similarly, Rebecca Seeley Harris, founder of Re: Legal Consulting, added that the upcoming tribunal could change the face of workers’ rights. “Hundreds of thousands of [workers] over the years have been denied holiday pay because the system hasn’t kept pace with the changing world of work,” she said. “If the fresh employment tribunal decides that the couriers are indeed ‘workers’ and deserve employment rights, then this case could open the door to many others in the gig economy.”