Although the contract documentation between the company and its drivers stated that there was no obligation on the driver to provide services nor on the company to offer them, the Employment Appeal Tribunal (EAT) held in Addison Lee Ltd v Lange and ors that the drivers were workers because the contract did not reflect the reality of the situation and they were clearly “undertaking to perform driving services personally” when they logged on to the employer’s system.
Addison Lee, a private hire firm, operated a system whereby drivers hired a vehicle from an associated company under a hire agreement which was painted in the company’s livery. The drivers, after being inducted, trained and passing a probationary period, were given a hand-held computer, which they had to log onto when they were ready to start work. Once logged on they were then allocated a job which they had to accept unless they could provide an “acceptable reason”. If they refused a job they could be subject to a sanction.
The terms of the driver’s contract provided that subject to selecting a particular circuit (night time, anytime, or weekend) they could choose the days and times they wished to offer their services; and there was no obligation on them to provide services nor was there any obligation on Addison Lee to provide any work (the mutuality of obligations clause).
Three drivers brought claims against the company asserting they were workers and entitled to holiday pay under the Working Time Regulations 1998 (WTR) and the national minimum wage under the National Minimum Wage Act 1998 (NMWA).
Section 230(3)(b) of the Employment Rights Act states that a worker is an individual who has entered into either:
(a) a contract of employment; or
(b) “any other contract … whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual" This is known as the limb b) test.
Similar definitions are found in section 2(1) of the WTR and section 54(3) of the NMWA.
The tribunal accepted that there was an overarching contract which was implied from the conduct of the parties. In particular, the tribunal found that not only did the drivers have to apply and be interviewed, they were also subject to a knowledge test, By entering into a hire agreement for the vehicle they were subject to a serious financial agreement, the commercial reality of which was that they had to log on to start earning money to pay their overheads. They had a real expectation that they would be offered work once logged on.
The tribunal also found that even if there was no overarching contract the drivers were workers when they logged on because they were undertaking to perform driving services personally.
Addison Lee appealed on the ground that economic forces were not enough to establish mutuality of obligations sufficient to imply an overarching contract nor were they workers when they accepted a job given the terms of the contract.
The EAT dismissed the appeal. It upheld the tribunal’s finding that although the drivers could choose when to work, the reality was that they were obliged to undertake the driving jobs allocated to them. Equally having encouraged drivers to commit substantial time and money into training and the hire of a vehicle the company was undertaking to give them a fair opportunity to obtain bookings. The tribunal was therefore right to apply the principle established in Autoclenz where the mutuality of obligations clause did not represent the reality of the situation.
The EAT also upheld the finding that the drivers were obliged to accept jobs once they logged on not just because of economic necessity but they would also be subject to sanctions if they refused a job in the absence of an acceptable reason. As such they fell within the category of worker identified by the court in Pimlico Plumbers (LELR weekly 581) since they were regularly offered and accepted work to the extent that they pretty much worked continuously.
The drivers were also engaged in working time when they were logged on and they were still at the disposal of the company when they were not carrying passengers. This was consistent with the European Court decision in Tyco (LELR weekly 442) which held time spent by mobile workers travelling from home to the first customer and from the last customer was working time.
This case confirms that employers cannot avoid workers’ rights by writing into the contact that there is no obligation on the company to provide work nor an obligation on the worker to accept it where that does not reflect the commercial reality. In this case, as the EAT pointed out, if drivers had a free choice to refuse bookings, “it is difficult to see how the Respondents business could operate at all”.