The recent case of HGV Quick Transport Ltd before Traffic Commissioner (TC) Turfitt serves as a reminder that Traffic Commissioners expect drivers to be employees as the default position.
The case also discussed the situation with agency drivers and it is worth reviewing the statement below on the matter:
“The publicly available guidance on the GOV.UK website advises that a person is an agency worker if they have a contract with an agency but work temporarily for a hirer. I quote: “You’re not an agency worker if you use an agency to find permanent or fixed-term employment.” Even where there is a legitimate agency arrangement, the 2010 Agency Regulations provided that, after a qualifying period of 12 weeks, the basic working and employment conditions (working time, overtime, breaks, rest periods for night work, holidays and pay) of temporary agency workers must be at least as beneficial as those that would apply if they had been recruited directly. Agencies also have a legal obligation to gather certain information before offering work to an agency worker. When the agency offers a worker an assignment, they must, at the same time give that worker details which include: the name of the hiring organisation and the nature of its business, the start date, how long the assignment is likely to be for, details of the position and type of work. Regulation 13A of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 requires all agency workers, who sign up to an employment business after 6 April 2020, to be given a ‘Key Information Document’.
Beyond that, HMRC guidance helps operators to determine where a contract of employment is appropriate. This reflects the legal position as adopted by the First-Tier Tribunal (Tax) considered the employment status of drivers in TC/2015/03681 RS Dhillon and GP Dhillon Partnership v The Commissioners for her Majesty’s Revenue & Customs. HMRC is aware that some operators wrongly believe that anti-avoidance legislation does not apply and that HMRC cannot pursue workers, agents, and the operator. Whilst the flexibility of temporary drivers allows operators to deal with sudden or seasonal increases in work or a shortage of staff due to turnover or resulting from absences, HMRC defines temporary employees as people that are contracted to a job for a limited period, and they are hired straight from the company or through a third-party agency that staffs for other companies. Even workers doing occasional work for a specific business (where the worker has to agree to terms and conditions to obtain the work, where the business provides the materials, tools, or equipment) can be subject to the deduction of tax and National Insurance contributions from their wages.”
From this, it should be clear that the relevance is whether the operator is able to exercise sufficient control of activities under the operator’s licence, so as to achieve compliance with the licence standards.
The TC decided that this was not proved in the HGV Quick Transport case, putting the future of the business at risk. The circumstances resulted in road safety-critical defects not being identified on vehicles and trailers and poor maintenance standards. Basic systems, such as driver training and control, were lacking.
The Upper Tribunal has held that the legitimacy of a driver’s employment status may be fact-specific. For example, the use of a conduit company to pay drivers does not automatically mean that those drivers are not employees. Instead, a number of factors must be considered and, where a driver is found to be a de facto employee, then the company will be liable for their conduct. The Upper Tribunal has also reviewed the tax and employment position of goods drivers. In that case, the employment clauses suggesting that the drivers had a degree of control were undermined by the reality and as described in the Driver Handbook. The Upper Tribunal raised concern that the arrangement was highly questionable, if not a sham, as the company and transport manager had abdicated their responsibilities for ensuring that the transport operation was compliant and safe, in order to save money.
The test for self-employment was set out in the case of Ready Mix Concrete and involves three key hurdles:
- Is the worker subject to a right of control?
- Does the service have to be provided by that individual?
- Are the other factors present consistent with a contract of service?
In general, someone is self-employed if they are in business on their own account and bear the responsibility for the success or failure of that business. Conversely, they will be employed if they personally work under the control of their engager and do not run the risks of having a business themselves.
Where a traffic commissioner encounters driver engagement, which does not appear to meet the prevailing tax requirements, they will consider the impact on fair competition. In the first instance, they might consider allowing an opportunity for the operator to ensure that relevant drivers comply with the HMRC guidance on employment. This could involve an undertaking to specify the date by which the operator will ensure compliance. However, as time goes on, operators will be expected to understand the rules and the TCs may adopt a less relaxed approach.
It is therefore important to either employ your drivers or receive written employment advice from an expert confirming that your drivers are genuinely self-employed
Our specialist team can support you with compliance awareness so that you do not get caught out by changes. Contact Jared Dunbar today for help.