Leyland and Others v. Hermes Parcelnet Ltd is the latest tribunal judgement in an increasingly long line of case law regarding the status of gig-economy workers. Following on from the Supreme Court decision in Pimlico Plumbers, Hermes reasserts that the courts are concerned with the reality of the underlying relationship as opposed to contracts often carefully tailored to avoid the application of worker status.

In this case, the claimants were a group of parcel couriers for Hermes Parcelnet Ltd (Hermes). All parties accepted that the claimants were self-employed, but the couriers alleged that they were also workers. This would have the effect of giving them statutory rights to national minimum wage and paid holiday, among other benefits.

Hermes relied upon terms in the contract that suggested there was no obligation on the couriers to do or perform the work personally – meaning that they could not be workers – and that Hermes was a client of the couriers. Thus, it argued that the relationship was a contract for services rather than a contract of service.

The couriers' contracts provided for an "unfettered right of substitution", meaning that the claimants were allowed to provide a replacement courier from either within the business ("cover") or outside the business ("substitution", i.e. friends and family). Hermes was unsuccessful on this point because the reality was that it retained the right to reject a replacement, even if that substitute was from within the business. Moreover, the tribunal judge found that it was not a case of being permitted to substitute, but rather an obligation to substitute if the courier could not complete the task given to them on their contractually specified days of work. As such, it was found that the requirement of undertaking work personally was clearly met.

Had the working days requirement not been included in the contract – meaning that the couriers could choose when to work – of the required mutuality of obligation might not have been so easily identified by the Tribunal. That in turn may have meant the couriers would not have been able to claim worker status.

Hermes' self-employed contractor argument was unsuccessful on this point as well. The tribunal decided that the workers' degree of dependence was similar to an employment relationship rather than an arm's length relationship characteristic of self-employment. Moreover the couriers did not advertise their services to the world at large but were independently recruited by Hermes as a necessary part of its business structure.

Finally Hermes unilaterally decided on all rates of pay, prepared all invoice collections and decided on which bonuses were payable to the couriers. It could also withdraw those bonuses whenever it wished. These factors reinforced the argument that Hermes was not a client of the couriers.

As a result, the couriers were successful in their claim to achieve worker status with all the statutory obligations which that brings upon Hermes. It must be noted that these decisions are highly case specific and it is unwise to rely on individual cases, especially tribunal cases, as binding precedent. However, what is clear is that the courts are continuing their move towards an understanding of work-related engagements which looks behind the contract and into the reality of the relationship.