The ECJ has given a preliminary ruling on a reference from the Watford Employment Tribunal in the case of B v Yodel Delivery Network Ltd regarding determining worker status. The ECJ ruled that the definition of worker status applied by the UK courts is not incompatible with EU law (specifically the Working Time Directive). The WTD must be interpreted as precluding a person engaged by his putative employer under a services agreement which stipulates that he is a self-employed independent contractor from being classified as a ‘worker’ where that person is afforded discretion:

• to use subcontractors or substitutes to perform the service which he has undertaken to provide;
• to accept or not accept the various tasks offered by his putative employer, or unilaterally set the maximum number of those tasks;
• to provide his services to any third party, including direct competitors of the putative employer, and
• to fix his own hours of ‘work’ within certain parameters and to tailor his time to suit his personal convenience rather than solely the interests of the putative employer,

provided that the independence of that person does not appear to be fictitious and it is not possible to establish the existence of a relationship of subordination between that person and his putative employer.

Facts

B is a neighbourhood parcel delivery courier who has worked exclusively for Yodel since July 2017. Yodel neighbourhood couriers are engaged on the basis of a courier services agreement which stipulates that they are ‘self-employed independent contractors’. They use their own vehicle to deliver the parcels handled by Yodel and use their own mobile telephone to communicate with that undertaking. Under the courier services agreement, couriers are not required to perform the delivery personally, but may appoint a subcontractor or a substitute for the whole or part of the service provided, whose substitution Yodel may veto if the person chosen does not have a level of skills and qualification which is at least equivalent to that required of a courier engaged by Yodel. In any event, the courier remains personally liable for any acts or omissions of any appointed subcontractor or substitute.

The courier services agreement also provides that the courier is free to deliver parcels for the benefit of third parties concurrently to providing services on behalf of Yodel.

Yodel is not required to use the services of the couriers with whom it has concluded a services agreement, and the couriers are not required to accept any parcel for delivery.

The parcels must be delivered between 7.30  and 21.00; however the couriers remain free to decide, except for fixed-time deliveries, the time of delivery and the appropriate order and route to suit their personal convenience. A fixed rate, which varies according to the place of delivery, is set for each parcel.

B brought a claim that he had worker status. The employment tribunal considered that the right of substitution precluded worker status as the status of ‘worker’ presupposes that the person concerned undertakes to do or perform personally any work or service. Furthermore, that status is incompatible with that person’s right to provide services to several customers simultaneously. However, the tribunal was concerned that in this respect UK law may be incompatible with the Working Time Directive.

ECJ referral

The  tribunal decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

1. Does the Working Time Directive (“WTD”) preclude provisions of national law which require an individual to undertake to do or perform all of the work or services required of him, “personally” in order to fall within the scope of the WTD?
2. In particular
   1. Does the fact that an individual has the right to engage subcontractors or “substitutes” to perform all or any part of the work or services required of him mean that he is not to be regarded as a worker for the purposes of the WTD either:
      • at all (the right to substitute being inconsistent with the status of worker); or
      • only in respect of any period of time when exercising such right of substitution (so that he is to be regarded as a worker in relation to periods of time actually spent performing work or services)?
   2. Is it material to a determination of worker status for the purposes of the WTD that the particular claimant has not in fact availed himself of the right to subcontract or use a substitute, where others engaged on materially the same terms have done so?
   3. Is it material to a determination of worker status for the purposes of the WTD that other entities including limited companies and limited liability partnerships are engaged on materially the same terms as the particular claimant?
   4. Is it material to a determination of worker status for the purposes of WTD that the employer is not obliged to offer work to the individual claimant i.e. that it is offered on a “when needed” basis; and/or that the individual claimant is not obliged to accept it i.e. it is “subject always to the courier’s absolute right not to accept any work offered”?
   5. Is it material to a determination of worker status for the purposes of the WTD that the individual claimant is not obliged to work exclusively for the putative employer but may concurrently perform similar services for any third party, including direct competitors of the putative employer?
   6. Is it material to a determination of worker status for the purposes of the WTD that the particular claimant has not in fact availed himself of the right to perform similar services for third parties, where others engaged on materially the same terms have done so?
   7. For the purposes of the WTD how is a worker’s working time to be calculated in circumstances where the individual claimant is not required to work fixed hours but is free to determine his own working hours within certain parameters e.g. between the hours of 7.30 and 21.00? In particular how is working time to be calculated when:-
      1. The individual is not required to work exclusively for the putative employer during those hours and/or that certain activities performed during those hours (e.g. driving) may benefit both the putative employer and a third party;
      2. The worker is afforded a great deal of latitude as to the mode of delivery of work, such that he may tailor his time to suit his personal convenience rather than solely the interests of the putative employer.’

ECJ decision

The ECJ noted that the WTD does not define the concept of ‘worker’ but that the Court has previously held that the concept has an autonomous meaning specific to EU law.

The essential feature of an employment relationship is that for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration. The classification of an ‘independent contractor’ under national law does not prevent that person being classified as an employee, within the meaning of EU law, if his independence is merely notional, thereby disguising an employment relationship.

That  will be the case where a person, although hired as an independent service provider under national law, acts under the direction of his employer as regards, in particular, his freedom to choose the time, place and content of his work, does not share in the employer’s commercial risks and, for the duration of that relationship, forms an integral part of that employer’s undertaking, so forming an economic unit with that undertaking. On the other hand, more leeway in terms of choice of the type of work and tasks to be executed, of the manner in which that work or those tasks are to be performed, and of the time and place of work, and more freedom in the recruitment of his own staff are the features which are typically associated with the functions of an independent service provider.

It is for the referring court to ascertain whether a self-employed independent contractor, such as B, may be classified as a ‘worker’.

However, the Court made the following points:

• A person such as B appears to have a great deal of latitude in relation to his putative employer. In those circumstances, it is necessary to examine the consequences of that great deal of latitude on the independence of such a person and, in particular, whether, despite the discretion afforded to that person, his independence is merely notional.
• It must be ascertained whether it is possible to establish the existence of a subordinate relationship between B and Yodel.
• Concerning the discretion of a person to appoint subcontractors or substitutes to carry out the tasks at issue, it is common ground that the exercise of that discretion is subject only to the condition that the subcontractor or substitute concerned has basic skills and qualifications equivalent to the person with whom the putative employer has concluded a services agreement. The putative employer can exercise only limited control over the choice of subcontractor or substitute by that person, on the basis of a purely objective criterion, and cannot give precedence to any personal choices and preferences.
• B has an absolute right not to accept the tasks assigned to him. In addition, he may himself set a binding limit on the number of tasks which he is prepared to perform.
• The discretion to provide similar services to third parties may be exercised for the benefit of any third party, including for the benefit of direct competitors of his putative employer;
• While it is true that the service must be provided during specific time slots, the fact remains that such a requirement is inherent to the very nature of that service, since compliance with those times slots appears essential in order to ensure the proper performance of that service.

In the light of all those factors, the independence of a courier such as B does not appear to be fictitious and there does not appear to be a relationship of subordination between him and his putative employer.