Addison Lee wrongly classed drivers as self-employed, tribunal rules

Verdict in test case brought by three drivers against minicab firm could lead to wave of claims for unpaid wages and holiday pay

Drivers for London-based minicab company Addison Lee could be owed wages and holiday pay after an employment tribunal test case found that some had been wrongly classed as self-employed.

The tribunal in central London ruled that three drivers, who claimed they earned the equivalent of about £5 an hour as self-employed contractors, should have been treated as workers. That means they must receive the minimum wage of £7.50 an hour, plus holiday pay, and will be owed back pay.

Addison Lee uses 3,800 self-employed drivers in the capital, who are all potentially affected by the case brought by Michaell Lange, Mark Morahan and Mieczysław Olszewski. Their lawyers estimate that holiday pay for each worker could amount to £4,000, with wages yet to be calculated.

The verdict is the latest legal blow to companies operating in the gig economy and raises the stakes for the appeal against a similar ruling against rival minicab operator Uber, which opens at the employment appeals tribunal on Wednesday.

In October 2016 Uber lost a tribunal case brought by two of its 40,000 drivers, who argued successfully they should be treated as workers. Neither ruling automatically mean all self-employed drivers will receive worker rights, but unless the firms change the contractual arrangements, they would be left open to mass claims in the employment courts.

Addison Lee said it was disappointed with the ruling, which was handed down by employment judge David Pearl. He concluded its defence of the self-employment arrangement “defied evidential gravity”.

“We have always had, and are committed to maintaining, a flexible and fair relationship, which generates work for 3,800 drivers,” a spokesman for the company said, adding that it would review the decision.

Addison Lee made £61m in profit last year. It is owned by the private equity giant Carlyle Group, which brought it in 2013 for about £300m from owners including founder John Griffin, a former minicab driver, who set up the company in 1975.

During the tribunal, Addison Lee conceded that it had implied the drivers in its branded cars were part of its organisation, but argued that in reality each was running a small business.

However, the tribunal did not accept this after hearing that drivers faced fixed costs of hiring Addison Lee-liveried Ford Galaxy cars, which typically cost between 25 and 30 hours work a week to pay off.

It heard they were obliged to accept jobs once logged on to the company’s booking system, comply with a dress code and a code of conduct that, among other things, required asking customers if they had a preferred route. They were also told they must not “pull away” from a job without the consent of the control base, again suggesting they were not self-employed.

Pearl ruled that “the drivers were not in any realistic sense contracting with Addison Lee”, rather that “they were in a subordinate position”.

Morahan, 63, who worked as an Addison Lee driver for more than a year before bringing the case, said he had watched drivers’ earnings falling and that he was very pleased with the verdict.

“This combined with the Uber case will ensure that these American companies play by the rules,” he said. “They are happy to drop prices but it is the drivers who end up paying for it. When people are desperate for a job they have no option but to work longer hours and they are taken advantage of.”

Liana Wood, solicitor at Leigh Day, which represented the drivers, said Addison Lee had “sought to deny its drivers the most basic workers’ rights” and that its drivers “very often work very long hours, in excess of 60 hours a week, in order to just earn enough to cover their basic living costs”.

She said: “This decision will not just have an impact on the thousands of Addison Lee drivers but, following on from the decision in Uber, on all workers in the so-called gig economy whose employers classify them as self-employed and deny them the rights to which they are entitled.”

Maria Ludkin, legal director of the GMB trade union, which backed the claim, said: “This ruling means yet another logistics firm has been forced to obey the law and honour responsibilities to employees. GMB will continue to pursue these exploitative companies on behalf of our members.”

Similar employment tribunal cases considering worker rights for self-employed gig economy workers are due to be heard early next year involving couriers for the delivery companies Hermes and DX.


Robert Booth

The GuardianTramp

Related Content

Article image
Court rules Addison Lee drivers are workers, not self-employed
Drivers are entitled to national minimum wage and paid holiday, tribunal finds

Robert Booth Social affairs correspondent

14, Nov, 2018 @12:29 PM

Article image
Pimlico Plumbers loses appeal against self-employed status
Court rejection of workers’ status has knock-on effects for gig economy operators such as Uber and Deliveroo

Jamie Grierson and Rob Davies

10, Feb, 2017 @3:40 PM

Article image
Uber loses right to classify UK drivers as self-employed
Landmark employment tribunal ruling states firm must also pay drivers national living wage and holiday pay with huge implications for gig economy

Hilary Osborne

28, Oct, 2016 @5:55 PM

Article image
Self-employment status – who's next under the HMRC spotlight
The inquiry into employment conditions and status at delivery giant Hermes has put the focus on other large companies operating in the gig economy

Hilary Osborne

20, Oct, 2016 @6:54 PM

Article image
Ethical veganism is a belief protected by law, tribunal rules
Man sacked by League Against Cruel Sports told he is entitled to equality protections

Damien Gayle

03, Jan, 2020 @2:12 PM

Article image
Maya Forstater was discriminated against over gender-critical beliefs, tribunal rules
Researcher lost job at thinktank after tweeting that transgender women could not change their biological sex

Haroon Siddique Legal affairs correspondent

06, Jul, 2022 @3:27 PM

Article image
Thousands of Addison Lee drivers could receive payout over workers’ rights
Drivers could receive average of £10,000 each after court of appeal rules they have worker status

Sarah Butler

22, Apr, 2021 @3:12 PM

Article image
MPs berate low-cost gym chain over 'self-employed' personal trainers
Frank Field attacks Gym Group’s use of self-employed contracts as ‘egregious’ in latest conflict with gig economy firms such as Uber

Simon Goodley and Gwyn Topham

02, Nov, 2017 @10:45 PM

Article image
Sports Direct forced to advertise zero-hours contract terms
Retailer required to display limited terms under which 90% of its staff are employed, after reaching settlement with ex-worker

Sarah Butler

27, Oct, 2014 @3:38 PM

Article image
Being self-employed means freedom. Freedom to be abused and underpaid | Aditya Chakrabortty
Across Britain, firms are laying off permanent staff in favour of contractors – then treating them unfairly

Aditya Chakrabortty

05, Apr, 2016 @5:59 AM