Has the position on holiday pay for gig workers changed?

23 Sep 2019 By Tessa Fry

Tessa Fry analyses the implications for employers of a recent Court of Appeal judgment

In Harpur Trust v Brazel, the Court of Appeal ruled that a ‘part year’ music teacher was entitled to statutory holiday pay based on her average earnings over a 12-week period (17.5 per cent) rather than over an annual period (12.07 per cent). The case has been heralded by some unions as a “victory for gig workers that would pile costs on to businesses”. However, this is misleading. 

The Court of Appeal case was not won by a gig worker. The claimant is an employee on a zero-hours contract, providing individual music lessons in term-time only averaging 32 hours per week. It was not disputed she was entitled to holiday pay; the issue was how it should be calculated. 

The employer applied a calculation of 12.07 per cent of earnings during the previous term equivalent to the statutory entitlement of 5.6 weeks for a full-year employee. The claimant argued that the calculation should be one week’s pay (being the average earnings for a worker with no normal working hours over the preceding 12-week period under sections 221 to 224 of the Employment Rights Act) multiplied by 5.6, which equated to 17.5 per cent of her earnings – and the Court of Appeal agreed. 

Gig workers have no entitlement to holiday pay being self-employed contractors paid per gig or assignment unless they can prove they are, in reality, workers or employees. There have been various high-profile legal challenges to this self-employed status, notably against companies such as Deliveroo, Uber and Hermes. The majority of challenges have been successful, including subsequent appeals, with tribunals declaring the employment status to be workers rather than self-employed contractors. Worker status entitles individuals to the national minimum/living wage and holiday pay.

Despite these successful challenges, the legal position has not changed. Unless a gig economy worker brings a successful tribunal claim challenging self-employed status, there is no legal right to holiday pay, so this case is irrelevant. Even if successful, the decision will only benefit the individuals who bring the claim and not the rest of the workforce, although subsequent claimants can rely on the successful decision.

The issue of self-employed/worker status was, however, addressed in The Taylor review of modern working practices in 2017. The Taylor review proposed that worker status should be clarified by having a new dependant contractor status to be determined by what actually happens in practice rather than what is stated in the contract. This new status would have provided some employment rights including holiday pay.

The government’s Good Work Plan, published in December 2018 in response to the Taylor review, could have changed the legal position on employed/self-employed status, but this was barely addressed. Given the current preoccupation with Brexit, any changes will not be imminent, although the EU is introducing protection for gig workers over the next three years.

However, as a result of the litigation, some courier companies have offered their workers the choice of self-employed or worker contracts. These would entitle individuals to guaranteed hourly rates and holiday pay, but in exchange for more control on the routes and on the workers.

Another courier company has recognised a union for collective bargaining purposes that would cover pay, hours and holidays for workers in the relevant bargaining unit. However, the majority of gig economy companies continue to engage individuals as self-employed contractors. Without any voluntary agreement, there is no right to union recognition or worker contracts.

For other workers or employees with irregular hours, the case will only be relevant if they work in the same way as a part-year teacher; ie term-time only. 

Ironically, the teacher’s success is unlikely to continue beyond March 2020 since the pay calculation period of 12 weeks is due to be changed to 52 weeks. On this basis the 5.6 weeks will be calculated on a 52-week basis rather than 12 weeks; ie, in line with the school’s calculation.

Tessa Fry is head of employment at Grower Freeman Solicitors

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