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.