More than 100 estate agents are preparing to take legal action against Purplebricks, arguing they are entitled to holiday pay and pension contributions because they effectively worked for the company despite being classed as self-employed.
They are hoping to emulate successful claims made on behalf of gig economy workers against ride-hailing app Uber and taxi group Addison Lee.
Contractors for Justice, which is bringing the Purplebricks claim, is aiming to rally more of the 2,500 property agents it believes might qualify before it files the legal paperwork.
If Purplebricks were found to have been treating self-employed agents as if they were employed — for instance by controlling their schedules or limiting their ability to work for another employer — then each of those agents could be owed thousands of pounds, according to Peter Fletcher, a consultant for Contractors for Justice. He estimates the total claim could be worth £20m to £100m.
Purplebricks said its agreement with agents was clear that they were running their own business, as set out in their contract.
The group is the most prominent of several new online estate agents in the UK that have aimed to disrupt the traditional house-selling process. Founded in 2014, Aim-listed Purplebricks has grown to be the largest standalone agency brand, accounting for almost one in 20 UK sales last year and attracting funding from Neil Woodford and German media company Axel Springer.
Rather than a commission, the company charges a flat fee of £999 — or £1,499 in and around London — to market properties, which is payable even if they do not sell.
Central to Purplebricks’ low-cost proposition were hundreds of self-employed “territory owners”, who managed the company’s customers in large areas, and “local property experts” who worked under them. Many are now claiming their work should have been designated as full-time employment.
“[Purplebricks] kept telling me to do things that would suggest I was an employee: when I took over a new area, I was being asked to service those properties with no income; there was training you had to attend or they would close down your diary,” said one former territory owner who asked not to be named.
“When I joined it was completely sold to me as if it was my business — I was told I could build a franchise model from the ground up,” added another.
Both said their expectations had been dashed.
Another former agent described being pushed hard by his own manager, an employee of Purplebricks, on the rate at which he was selling and his availability to work. The experience was “very much the same as being employed at a high street branch . . . It doesn’t look like self-employment if you’re told what to do all the time,” he said.
Purplebricks said: “All territory operators entered into a commercial licence agreement and this was clearly set out in their contract with Purplebricks. We have always taken legal advice in regards to our licensing model — and the advice is very clear that these individuals were operating as limited companies, running their own business and with full control over their own staff.”
The company in August announced it would shift its approach to employing all agents directly, and it now makes pension contributions on their behalf and offers holiday and sick pay.
The Purplebricks claim is one of several brought by workers in the gig economy. Uber was defeated at the Supreme Court in February, in a case brought by 35 of its drivers who claimed they were not self-employed because the ride-hailing group controlled much of their work and allocated their customers. After the ruling, Uber announced it would give its drivers a guaranteed minimum wage, holiday pay and pensions.
In April, a UK judge dismissed an appeal by Addison Lee against a 2017 employment tribunal that ruled three of its drivers were eligible for minimum wage during the hours they were logged on.
Purplebricks’ share price has fallen by almost 90 per cent from a 2017 peak of 499p, a period in which the company has pulled back from expensive expansion efforts in Australia and the US and parted ways with its founders, Michael and Kenny Bruce.