Yet another ‘status’ case…

By November 15, 2018Employment, Legal Updates

Addison Lee Ltd v Lange and ors is the latest case looking at status, which is whether someone is self-employed, a worker or an employee.

Background

Addison Lee Limited is a professional private hire firm, using about 4,000 drivers to service the needs of both commercial and private customers.

The three claimants in this case were drivers within the private hire business. They brought claims against Addison for holiday pay and for the the national minimum wage which meant they had to show they had the status of a worker and were not self-employed.

The Working Time Regulations (WTR) provide that: “worker” means an individual who has entered into or works under (or, where the employment has ceased, worked under) –

(a) a contract of employment; or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual and any reference to a worker’s contract shall be construed accordingly.

Case

The Employment Appeal Tribunal (EAT) has upheld an employment tribunal’s decision that the private hire drivers were ‘workers’ and so were entitled to paid annual leave and the national minimum wage. The tribunal was entitled to adopt a ‘realistic and worldly wise’ approach and find that the contractual documentation, which stated that the drivers were under no obligation to accept work and that Addison Lee was under no obligation to offer it, did not reflect the reality of the working arrangements.

The tribunal considered the working arrangements and the contracts. The drivers:

  • usually hire a vehicle in Addison’s branding from an associated company
  •  they are provided with a hand-held computer which they log into when ready to work
  • when a job is assigned, they are expected to accept it. A sanction may follow a refusal to accept the job
  • driver would need to work between 25-30 hours per week to recover the fixed costs of vehicle hire
  • drivers signed a Vehicle Hire Agreement (VHA) and a Driver Contract. The Driver Contract stated that the driver was an independent contractor, that drivers could choose the days and times when they wished to provide services, and that there was no obligation on either side to provide or do work

On looking at the facts, the tribunal found there was an overarching agreement providing for mutual obligations to offer and perform work, despite the contrary provision in the Driver Contract. It found that:

  • given the costs and obligations imposed by vehicle hire, there was an economic obligation on the drivers to log on and earn money
  • the tribunal further found that the drivers had a realistic expectation of being offered work when they logged on
  • the drivers were obliged to do work personally once they logged on
  • as for the question of working time under the WTR, the tribunal found that the drivers were working whilst logged on (except for break times)

Addison appealed to the EAT. The EAT dismissed the appeal. In the EAT’s view,

“No honest driver would put (Addison) to the expense of considering his application to join, checking his credentials, training him and putting him on its system unless he was undertaking to do some work for (Addison); and (Addison), as an honest and reputable company, would not encourage drivers to commit very substantial time and money to its training and to the hire of a vehicle if it was not undertaking to put them on its system and give them a fair opportunity of obtaining bookings”

This the latest of many court judgments that have found that people working in the gig economy are wrongly being classed as self-employed, and further highlights the need for certainty in this area.

If you would like advice on this subject or any other employment law matter, please contact Linda Wilson at lsw@macdonaldoates.co.uk

N.B. Please note that the above information is a guide only and does not constitute legal advice. We recommend seeking specialist legal advice on your own particular circumstances