ANOTHER DECISION ON THE ISSUE OF EMPLOYMENT STATUS; THE EMPLOYMENT APPEAL TRIBUNAL DISMISS ADDISON LEE'S APPEAL

The Employment Appeals Tribunal (EAT) recently upheld a Tribunal’s decision that private drivers working for Addison Lee (a private taxi service company) are classified as ‘workers’, rather than self-employed, and are therefore entitled to paid annual leave and the national minimum wage.

The private hire drivers employed by Adison Lee Ltd sought to issue claims for holiday pay and national minimum wage. This required the drivers to establish that they were classified as ‘workers’ under the general meaning of the Employment Rights Act 1996, the Working Time Regulations 1998 and National Minimum Wage Act 1998, whereas Addison Lee argued that the drivers were self-employed. The Tribunal therefore needed to consider the working arrangements of the drivers as well as the contracts of employment in determining the issue of status.

Though a contractual document provided showing that the drivers in question were under no obligation to accept work and neither was Addison Lee under an obligation to offer it, the Tribunal decided that a ‘realistic and worldly wise’ approach was needed.  Taking this approach the Tribunal ruled that the contract did not reflect the reality of the working arrangements as there was in fact an overarching agreement providing for a mutual obligation to offer and perform work. The EAT dismissed Addison Lees appeal and approved the Tribunals ‘realistic and worldly wise’ approach.

This decision is yet another case on the hot topic of employment status. A contract of employment can negate an individual’s ‘worker’ status if this is not consistent with the operative nature of the employment relationship, the operative nature will take precedence over the terms of the contract and the Tribunal will look at what happens in reality.

This decision may come as a surprise to many employers, particularly those who use the same methods of work allocation as that of Addison Lee. It is important to always monitor the working arrangements of private hire drivers, and indeed,  of any worker that is considered to be working on a ‘self-employed’ or ‘worker’ type arrangement.  We are seeing ever more litigation on the issue of employment status and many recent decisions have fallen in favour of the workers involved.  This is often at vast expense to the businesses involved by way of back payment of entitlements such as minimum wage and holiday pay.  Employers should be paying heed to these decisions and considering their own working practices if they wish to avoid claims against them. If their contracts do not properly reflect the reality of the situation, then consideration should be given to amending contracts to reflect the true working practices within their business.