Private hire drivers were workers and entitled to NMW and holiday pay

Employment tribunal was right to take a "realistic and worldly-wise" approach as written contract did not reflect the reality of the arrangement

In Addison Lee Limited v Lange and others, the Employment Appeal Tribunal upheld the decision of an employment tribunal that private hire drivers who were nominally self-employed were in fact workers and that the time they spent logged on to the company's system was working time.

The claimants were private hire drivers.  They brought claims for National Minimum Wage (NMW) and holiday pay, both of which require worker status.

An employment tribunal found that the claimants were workers working under an overarching contract. It found that the written contract did not reflect the reality of the situation which was that the drivers were obliged to carry out some work while they were logged on and that the company was obliged to provide them with some work. It also found that the drivers had to perform the work personally.

The tribunal heard that there was considerable control of the drivers. Drivers underwent induction and training. They had to obey the Addison Lee code of conduct during and in between jobs. They could be sanctioned by being blocked from the booking system if they refused a job. They were also under an ongoing obligation to pay fees for hiring the liveried cars from an associated company from week to week. It was found that the drivers needed to work between 25 and 30 hours per week to recover the costs of hiring the vehicle.

The contract stated that the drivers agreed that they were independent contractors of Addison Lee rather than employees or workers.  It stated that in some cases the driver was a sub-contractor for Addison Lee delivering a service to its account holders. Where passengers were not account holders, the company was stated to act as an agent for the driver, with the contract being between the passenger and the driver. In reality, in both cases, the driver had no knowledge of or control over the fare which was agreed between the customer and Addison Lee. The tribunal found that in reality there was no contract between the driver and the passengers and that the drivers were not in a contractor / client relationship with the company.

The EAT agreed. It held that the tribunal was entitled to reach its conclusion, applying the "realistic and worldly wise" approach set out in Autoclenz Ltd v Belcher [2011] ICR 1157.

This decision by the EAT follows recent cases in the EAT, Court of Appeal and Supreme Court finding that nominally self-employed people are in fact workers.  Employers should be aware that there is a risk of such claims where "freelancers", "consultants" or "independent contractors" are engaged.  If the person in question is not in business on their own account and if they are obliged to perform the service personally, it is likely a tribunal would conclude they are entitled to workers' rights. As well as NMW and holiday pay, these also include pension auto-enrolment, working time protections and statutory sick pay. HMRC may also question such an arrangement and demand unpaid PAYE and National Insurance Contributions.