Private Hire Drivers Entitled to Paid Annual Leave and National Minimum Wage

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Private Hire Drivers Entitled to Paid Annual Leave and National Minimum Wage

On the 14th November 2018 the Employment Appeal Tribunal (EAT), in the case of Addison Lee Ltd v Lange and Ors, upheld an employment tribunal’s decision that private hire drivers working for Addison Lee are ‘workers’ and so are entitled to the ‘national minimum age’ and ‘paid annual leave.’

The EAT delivered its verdict stating that the Claimants were limb (b) workers and thus are entitled to holiday pay and the national minimum wage.

Despite the statement of the contractual documentation that stated that the drivers were under no obligation to accept work and that Addison Lee Ltd (AL) was under no obligation to offer it, the Tribunal was entitled to adopt a ‘realistic and worldly-wise’ approach and find that this didn’t reflect the reality of the working agreements.

The Claimants:

Three private drivers, Mr. Michael Lange, Mr. Mark Morahan, and Mr. Mieczyslaw Olszewski, were “the Claimants.” They were working for AL. They brought claims against the Respondent. In the applications, they demanded an entitlement to holiday pay and the national minimum wage. However, such right would only exist if they were workers and could meet and purpose of the S.230 (3) (b) of the Employment Rights Act 1996 and equivalent definitions in the National Minimum Wage Act 1998 (NMWA) and Working Time Regulations 1998 (WTR).

The drivers proved that they were working for AL and were able to meet the purpose of the Employment Right Acts, WTR and NMWA. Therefore, the EAT took into consideration the contracts and their working arrangements under which they worked.

The Respondent:

The ‘Respondent’ Addison Lee Limited business is a professional private hire firm. They work with over 4,000 drivers to taxi both commercial and private customers. The company also operates a courier business with cars, vans, motorcycles, and bicycles.

The System of Work

  • The respondent was engaged in providing new drivers with induction, training, and documentation. The documentation contained the instructions and revealed how the drivers should perform their duty. Initially, the document was called a ‘Driver Operation Guide’, later a ‘Driver Guidance’.
  • The claimants (drivers) working for AL usually hired a vehicle in AL’s livery from an associated company. Only one of the 4,000 drivers was an owner-driver. Slides used in training told the drivers that they would represent the Respondent at all times when they were in the vehicle.
  • Every driver was provided with a hand-held computer. This computer is known as an XDA. The driver would use the XDA to log in to when ready to work. This enables AL’s systems to assign work to drivers according to the respective location. The allocation of the job to drivers was fully automatic. When a job was allocated, the driver (he or she) would accept it. And if they did not do so, they had to give an acceptable reason for refusing. Refusing a job in this way was known as “unallocated.” A sanction may follow a driver’s refusal.”
  • The XDA was equipped with two buttons: one button was to take a break and another one for when the driver goes home. Also, drivers were free to log off at their convenience so long as they are not actually transporting a customer.
  • The Respondent did not promise to provide any specific amount of work or even a minimum amount of work. However, 50-60 hours per week were the average time. A driver would need to work between 25 to 30 hours per week before being able to recover the fixed costs of vehicle hire.

The Contract Document

  • As per the Contract Document, each driver (except the owner-driver) signed two documents: a Vehicle Hire Agreement (VAH) and a Driver Contract.
  • The VHA was drafted by the associated company (Eventech) that hired the vehicle. But, drivers agreed that company could request that sums due, under the VHA, be paid from the driver’s earnings under the Driver Contract.

The Driver Contract stated:

  • The driver was an independent contractor,
  • The drivers could choose the days and times as per their convenience to provide services
  • There was no obligation on either side to provide or to do work.

The Employment Tribunal Proceedings and Reasons

Following a week of hearing evidence and argument, the ET concluded that the drivers were serving as workers under S.230 (3) (b) ERA. It upheld the argument made on behalf of drivers that there was an overarching agreement providing for mutual obligations to offer and perform work, despite the contrary provision in the Driver Contract. It also concluded that, given the commitments and costs imposed by the VHA, there was a financial obligation on the drivers to log on and earn money to cover the cost of hiring the vehicle.

The ET further stated that the drivers were left with a realistic expectation of being allocated work when they logged on. It also found that even if it were wrong about the overarching contract, the drivers were obliged to do job personally once they logged on, which satisfied S.230(3)(b) ERA.

As far as the working time under the WTR is concerned, the Tribunal found that the drivers were working all the time they are logged on (not during break times), irrespective of whether or not they were actually driving since they were at AL’s disposal. AL appealed the decision to the EAT.

Dismissal of appeal

The EAT dismissed the appeal. On the ‘worker’ question, it stated that the Tribunal found that the drivers (when they were logged on) were accepting the driving jobs allocated to them.

The EAT held that this was the kind of case referred to by Lord Justice Underhill in Pimlico Plumbers Ltd and Anor v Smith (Brief 1066), where the regular offer and acceptance of work, so that the drivers worked pretty much unceasingly, amply justified the conclusion that they had limb (b) worker status.

The EAT went on to state that the Tribunal found that the drivers were workers under an overarching contract. Though drivers were offered a great deal of flexibility as to the time and place where they logged on to work, it was not realistic to determine that either side involved in these arrangements with the belief that the other undertook no obligation at all.

According to the EAT,

  • No honest driver would put an employer to the expense of training him or her, checking his/her credentials and putting him/her on the system unless he/she was undertaking to do some work
  • No reputable and honest company would encourage drivers to be committed to the very substantial time and money to its training and the hire of a vehicle if it was not undertaking to put the driver on its system and give him or her a fair opportunity of obtaining bookings.

Although these obligations were not mentioned on either side within the Driver Contract, the Tribunal, in its own right, found a ‘realistic and worldly-wise’ way and concluded that they existed, and ignored the contrary contractual provisions under the principle, which was established by the Supreme Court in Autoclenz Ltd v Belcher and ors (Brief 934).