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Mutuality of obligation
[ch 2: pages 35-36]“Mutuality of obligation” simply means a legal obligation on someone to carry out some work in return for some (usually money) payment. There must be mutuality of obligation to have any contract at all, whether as a worker or an employee. This is why a genuine volunteer is neither an employee nor a worker (X (Appellant) v Mid Sussex Citizens Advice Bureau [2012] UKSC 59). (See Volunteers, page 47). It also explains why interns who really are genuine volunteers are neither workers nor employees (see: Interns, page 47).
The obligation is only to do “some work”. Having a contractual right to refuse work or to choose to withhold work does not mean there is no mutuality of obligation, as long as there is some obligation to work and some obligation to provide or pay for that work (St Ives Plymouth Limited v Haggerty [2008] UKEAT/0107/08/MAA, Cotswold Developments Construction Ltd v Williams [2006] IRLR 181, Addison Lee v Lange [2018] UKEAT/0037/18/BA).
There can still be mutuality of obligation even if the contract says you are obliged to do work only if there is work available (Wilson v Circular Distributors [2006] IRLR 38).
Mutuality of obligation in the gig economy
“Mutuality of obligation” has been a key battleground in litigation over the rights of app-based gig economy workers on zero hours contracts (ZHC) to basic entitlements such as the National Minimum Wage and holiday pay.
In most cases, a person is likely to be working and entitled to worker rights while performing each task or assignment, for example, delivering a parcel or carrying a passenger (James v Redcats [2007] ICR 1006).
In most cases they are also likely to be working while they are logged onto the app and available for work in the territory it covers, waiting for the next ride or parcel, as long as there is some form of “sanction” or “penalty” for not accepting a task when it is offered. This sanction or penalty is what creates the “mutuality of obligation” needed to give rise to worker rights. Tribunals look at the reality of the situation to assess this, not at what the documents say.
For example, in Uber v Aslam [2018] EWCA Civ 2748, there was mutuality of obligation while drivers were logged onto the Uber app and waiting for a passenger because drivers were expected to accept a high level of rides. Drivers who refused three consecutive requests to take a passenger were logged off the app as a penalty. Similarly, in Addison Lee Limited v Lange [2018] UKEAT 37, private hire drivers were working while parked up and waiting for a new instruction largely because there was a penalty (being logged off and/or reported to a supervisor) if they refused jobs while logged on without a good reason.
In some cases, they may also be working even if they are free to decline a shift when logged on, as long as there is evidence of a regular course of dealing (being offered and accepting rides or shifts) between the parties while logged on (Addison Lee v Gasgoine [2018] UKEAT/0289/17). It all depends on the context.