Summary

The Employment Appeal Tribunal (‘EAT’) has upheld the Employment Tribunal’s finding that drivers working for private hire taxi company, Addison Lee, are workers, not self-employed contractors, and should receive the national minimum wage and holiday pay.

Why this matters?

By reaffirming the Tribunal’s decision, the EAT has given a further reminder that the wording of a contract offers no protection to an employer if it does not genuinely reflect the true working relationship between parties. Tribunals can look beyond the contract in place to the reality of the working arrangements in place.

This is the latest in a line of cases where worker status has been established by those engaged in the gig economy on a self-employed basis. In May 2018, a cycle courier also working for Addison Lee was found to be a worker despite his contract labelling him as an independent contractor, and we await judgment from the Court of Appeal in Uber BV v Aslam following an appeal by Uber that two of its 40,000 drivers were workers.

Addison Lee engages approximately 3,800 “self-employed” drivers across London. Whilst this ruling does not automatically mean that all drivers will now be deemed to be workers and therefore entitled to the national minimum wage and holiday pay, unless Addison Lee reviews the status of its drivers and the contractual arrangements it has in place with them, it will be left open to the risk of mass Employment Tribunal litigation. We understand that claims from a further 40 current and former drivers have already been issued.

It is now, more than ever, imperative for businesses wishing to engage a flexible workforce to carefully examine how the arrangements work in practice and assess employment status realistically at the outset.

Background to the case

The three claimants were drivers for Addison Lee. They claimed that rather than being genuinely self-employed as purported in the contractual documents, they were actually workers and therefore entitled to the national minimum wage and holiday pay.

They relied on various factors in support of their claim, including an in-depth recruitment process (they were interviewed, tested, inducted, trained and then subject to a probation period), long working hours, company branding on the cars they rented from a company associated with Addison Lee, strict dress code standards and, in particular, the fact that whenever they were logged on to Addison Lee’s hand-held computer system, they were automatically deemed to be available for work. When offered work, drivers were expected to accept it and if they refused, they were required to provide reasons for their refusal, failing which a sanction would be imposed.

The contractual documentation entered into by the drivers with Addison Lee described them as “independent contractors”. It expressly stated that they were under no obligation to provide services to Addison Lee and that they could choose the dates and times they worked. Whilst they were not promised a minimum amount of work, they were informed that an average driver worked approximately 50-60 hours per week for Addison Lee.

Employment Tribunal

The Tribunal held that contrary to the wording of their contracts, the three drivers were workers and not independent contractors.

The Tribunal concluded that there was an overarching contract in place between each driver and Addison Lee, providing for mutual obligation to offer and perform work. The Tribunal went on to find that, even if it was wrong about there being an overarching contract, once the drivers were logged on to Addison Lee’s computer system, they were personally obliged to work, and this was sufficient in itself to make them workers.

Addison Lee appealed to the EAT, arguing that the Tribunal had wrongly concluded that there was an obligation on drivers to accept work.

EAT

The EAT, applying the principle from Autoclenz Limited v Belcher that tribunals are entitled to look beyond the contractual documents in place to the reality of the working arrangements, affirmed the Tribunal’s decision and dismissed the appeal. The EAT held that when determining an individual’s employment status in circumstances where it is alleged that the contract is not an accurate reflection, a Tribunal is entitled to use a “realistic and worldly wise” approach.

The EAT agreed that once a driver had logged onto Addison Lee’s computer system, they were undertaking to accept the work allocated to them. Further, the EAT stated that Addison Lee, as a reputable company, would not encourage drivers to spend a substantial amount of time and money in undertaking training and hiring a vehicle if it was not going to provide its drivers with a fair opportunity to obtain bookings.

The EAT also concluded that there had been no error of law in the Tribunal’s finding that when drivers were logged on to the computer system, this satisfied the definition of “working time” under the Working Time Regulations 1998 as they were at Addison Lee’s disposal.

It is open to Addison Lee to apply for permission to appeal the EAT’s decision to the Court of Appeal.