Testing the employment status of private hire taxi drivers

In the case of Addison Lee v Lange and Ors, the Employment Appeal Tribunal (EAT) were asked to rule on whether private hire taxi drivers were classed as workers or self-employed.

The drivers in question were hired under a ‘driver contract’ which expressly stated that they were recognised as ‘independent contractors’ i.e. self-employed, and would act as sub-contractors for Addison Lee when bookings were made by the company’s customers. There was no obligation on Addison Lee to offer work to the drivers, or for the drivers to accept work when it was offered. Furthermore, the contracts stated that it was up to the driver to decide what times they would be available for work by logging into the company’s app and being allocated driving jobs.

At the start of the relationship drivers were personally informed of the organisation’s preferred method of working. As part of the working relationship, most individuals drove specific branded vehicles that were hired through a firm associated with Addison Lee, the cost of which took around 25-30 hours of work a week to pay off.

Drivers were provided with a device to notify them of a driving job and informed of the expectation that jobs would be accepted when they were offered. They were informed that drivers who wished to turn down jobs could face a sanction if the reason given wasn’t deemed acceptable. Although drivers were told they could log off whenever they wanted, in reality they were expected to work up to 60 hours a week. In instances where individuals were logged off for more than three or four days the driver would be contacted to find out why this was the case.

Three drivers initially took Addison Lee to an employment tribunal (ET) and contended that they were being incorrectly labelled as self-employed and should instead be recognised as workers under s230(3)(b) of the Employment Rights Act 1996. After applying the appropriate test, the ET determined that the drivers should be considered as workers as the existing contracts demonstrated the inequality of bargaining power in the working relationship.

Addison Lee appealed to the EAT, arguing that the drivers were under no obligation to accept work and could refuse at any time. However, the EAT rejected this and looked behind the wording of the contract into the true nature of the employment relationship. When doing so they found that once logged on drivers could only reject jobs in occasional circumstances and that sanctions could be imposed if the drivers did not accept the work. As a result, the EAT held that there was clear ‘mutuality of obligation’ present between both parties, which meant the drivers could not be considered self-employed.

This decision is another important reference point for employers tasked with a challenge over employment statement and further reiterates a tribunals commitment to looking beyond any pre-existing contracts in favour of evaluating the true nature of the working relationship.

Suggested Resources