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Self-Employed or a Worker? Employment Tribunal Rules Against Addison Lee

on Friday, 06 October 2017.

An Employment Tribunal has ruled that three drivers working for Addison Lee are 'workers' and not independent contractors, despite their contracts stating otherwise.

This decision follows other high profile cases in this area, including the Uber case where it was found that Uber drivers were also workers and not self-employed. 

Background

Addison Lee engages approximately 4,000 drivers in London. The contractual documents between the company and its drivers state that the drivers are self-employed. As a result, the drivers are not provided with paid holiday and fall outside the protections offered by the Minimum Wage Regulations. The three drivers in this case argued that they were in fact "workers", even though the contractual documents said otherwise.

The Decision

The Employment Tribunal found in favour of the drivers. The test the Tribunal applied was as follows:

  1. Is there a contract?
  2. Does the individual work for the other contracting party?
  3. If so, is s/he obliged to perform the work personally?
  4. Is the other party a customer of a business undertaking carried out by the putative worker?
  5. If not, the individual is a worker.

In this case the key questions were around personal service and whether the drivers were in business for themselves (3 and 4 above). Some of the relevant findings of fact were: 

  • Of the 4,000 drivers in London, all but one hired their vehicle through a company associated with Addison Lee. Drivers had to work between 25 and 30 hours a week to cover the hire costs.

  • Drivers went through a detailed recruitment, training and induction programme.

  • Once logged on to the online handheld computer that Addison Lee used to allocate jobs, the drivers had to accept the jobs given to them promptly.

  • If the jobs allocated by the system were refused the driver had to provide an acceptable reason. If Control deemed the reason unacceptable, the matter would be sent to a supervisor and could result in disciplinary action.

  • The drivers had no knowledge or control over the fare that was received.

  • The behaviour of the drivers was regulated by Addison Lee, from the way they interacted with customers to their dress and whether any radio could be played in the car. New drivers were closely monitored for a period of four weeks.

  • Control would contact the drivers for a number of reasons, including if their car was empty for more than 3 hours.

  • If drivers were logged off the computer system for more than 3 to 4 days, Control would make contact with the driver to ask why - drivers were encouraged to notify Addison Lee of any holiday they planned to take in advance.

  • Addison Lee required drivers to undertake a minimum amount of work per week, otherwise they would receive a £35 weekly service charge.

The Tribunal found that when the drivers were logged onto Addison Lee's system they were working for the purposes of accruing holiday and the right to receive the national minimum wage.

What You Should Do if You Have Self-Employed Staff

If you engage individuals on a self-employed or contractor basis, you should think carefully about the everyday obligations that you place on these individuals. Employment Tribunals will look at the working relationship in practice, as well as any written contract that may exist. If the written contract is held to be a sham, it will not protect you from a finding of 'worker' status.

You should also think carefully about how you structure the services you receive from your workforce. It should be noted that as in previous cases such as Uber and CitySprint, the Employment Tribunal limited its decision to the particular facts of this case. It may therefore be possible for Addison Lee and others to adapt their working practices to avoid liability in the future.

By way of an update, Uber have appealed the finding against them and that appeal has now been heard. Judgement is awaited and we will update you on the outcome when it is known.


For further information on the status of employees and advice on drafting contracts of employment, please contact Michael Halsey, in our Employment Law team, on 020 7665 0842.

 

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