In another important ruling regarding employment status, the Employment Appeal Tribunal (EAT) has upheld a tribunal’s decision that drivers employed by Addison Lee were not self-employed (as their contracts stated) but, were actually workers providing personal service. The tribunal was entitled to look at what, in fact, happened and the employer could not rely on the written terms of the contract as these did not reflect the reality of the situation.

Background

A number of important employment rights (unfair dismissal, maternity leave and redundancy pay) are only provided to individuals who are employees, i.e. who work under a contract of employment. However, many other valuable rights (e.g. to be paid the national minimum wage, annual leave and rest breaks) are provided to a wider category of workers, which includes, but is not limited to, employees (i.e. all employees are also workers, but not all workers are employees).

To satisfy the legal definition of worker an individual must:

  • be obliged to do the work personally, and
  • the person for whom the work is done must not be a client or customer of a business being run by the individual (i.e. they must not be in business on their own account)

In order to be a worker, an individual does not have to establish other key elements necessary for employee status, in particular mutuality of obligation (the obligation on the employer to provide or pay for work and on the employee to perform it), or control (e.g. how, when and where the work is done).

Facts 

The claimants worked for the private hire firm, Addison Lee, as drivers under a ‘Driver Contract’. They claimed that Addison Lee had incorrectly classified them as independent contractors, when in fact they were workers. This would mean that they were entitled to holiday pay and to receive the national minimum wage for all the time that they logged into the employer’s driver portal. Their contract did not contain a substitution clause; the drivers had to perform their work personally.

Unhelpfully to its case, Addison Lee’s chief executive had  given an interview where he said that ‘our employees are full-time professional drivers, and we recruit, vet and train them’.

Other indications that the claimants were workers included:

•a rigorous recruitment process

•training to a high level

•six-day weeks and long hours

•driving vehicles that were conspicuously branded as Addison Lee cars

•renting cars from Addison Lee (and not being able to use the car to work for other private hire operators)

•strict standards regarding dress codes and how the drivers provided their services

•the fact that as private hire drivers they could not accept bookings nor tout for business

The employer’s main argument was that their contracts stated that the drivers were independent contractors, and that this agreement was not a sham. It also argued that the drivers had flexibility (such as to work for other companies), but simply chose not to exercise these rights. They also (unsuccessfully) argued that there was never any obligation on the drivers to perform work, even when logged into the driver portal.

The tribunal held that the claimants were workers and that the express contractual provisions of the Driver Contract did not properly reflect the true agreement between the parties. The employer appealed.

EAT decision

In Addison Lee v Lange and ors the EAT  dismissed the appeal and upheld the tribunal’s conclusions that the contractual provisions did not properly reflect the true agreement between the parties. The tribunal was right to conclude that the drivers undertook to perform work personally for Addison Lee and the employer’s status was not that of client or customer of any business undertaken by the drivers. Therefore the drivers were workers and entitled to national minimum wage and paid holidays.

Comment

The outcome of this case is perhaps not surprising in the light of other recent judgments in the cases of Gascoigne (dealing with a cycle courier also engaged by Addison Lee) and Aslam ( dealing with private hire drivers,  engaged by Uber). It is clear that the trend in employment tribunals is towards finding in favour of individuals as workers.  However, each case turns on its own particular facts. so this might not always be the outcome.  What actually happens in practice will be the key, even if the contract states that the relationship is a self-employed one. This case demonstrates that employers can no longer avoid providing workers with their employment rights and benefits by simply stating in the contractual documentation that someone is an independent contractor.

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Updates: For employers: Holiday and working time | Pay and pensions | For employees: Holiday |

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