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21 January 2019

142: Private hire drivers deemed as ‘workers’ not self-employed contractors

In Addison Lee Ltd v Lange and others, the Employment Appeal Tribunal (EAT) upheld an Employment Tribunal’s decision that three private hire drivers are workers, not self-employed contractors. This means that they are entitled to the national minimum wage and holiday pay.

Addison Lee has about 4,000 drivers servicing both commercial and private customers. Most of these drivers hire their cars from an associated company of Addison Lee. When ready for work, drivers log on to the company’s system from a hand-held computer. The system then automatically allocates them a job which they are expected to accept immediately. Refusing a job for an unacceptable reason may result in sanctions. Drivers enter into a contract with Addison Lee which describes them as independent contractors and states that they can choose the days and times they are available for work, although there is no obligation on Addison Lee to offer work or on the drivers to accept it when offered. There is no promise of a specific amount of work, but the claimants were told that in general they could expect to work around 50 to 60 hours per week.

Mr Lange and two other drivers brought claims in the Employment Tribunal arguing that they were workers and therefore entitled to the national minimum wage and holiday pay. Addison Lee contended that they could not be workers since there was no mutuality of obligation. Whilst conceding that drivers were held out as part of the organisation, Addison Lee argued that in reality they each ran their own small business.

The Employment Tribunal upheld the drivers’ claims. Noting that the drivers remained under Addison Lee’s rules between jobs, the Tribunal held that there was sufficient mutuality of obligation to give rise to an overarching contract between the parties. The commercial reality was that the claimants had undertaken to do driving work as and when they logged on and that, as Addison Lee well knew, they were economically bound to log on in order to cover their fixed car hire costs.

The EAT rejected Addison Lee’s appeal. It agreed with the Tribunal that the contractual documentation did not reflect the reality of the working relationship and upheld the finding that there was sufficient mutuality of obligation to imply an overarching contract. In practice, there was an underlying obligation to work for Addison Lee as well as an obligation to accept bookings. It was also relevant that Addison Lee provided induction, training and documentation setting out how drivers should perform their job, as well as a code of conduct.

The EAT also confirmed the Tribunal’s finding that drivers satisfied the definition of working time from when they logged on until they logged off, since during that time they were at Addison Lee’s disposal, ready to transport passengers.

As in other courier and taxi cases, the written documentation in this case did not reflect the reality of the relationship between the parties. This decision is consistent with the EAT’s previous ruling on Addison Lee’s cycle couriers (Addison Lee v Gascoigne) and other gig economy cases, as well as the Court of Appeal’s recent judgment in the Uber case which has some similar features, although it is likely that Uber will now appeal to the Supreme Court. The Government has recently published the ‘Good Work Plan’ which suggests that it will legislate to clarify employment status tests and expedite proposals to align employment status for the purposes of employment rights and tax.

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