In Afshar and others v Addison Lee Limited (Case nos 3306435/2020 and others) 7 January 2025 an Employment Tribunal held that drivers engaged by Addison Lee Limited (‘AL’) in its private hire business are workers within the meaning of the Working Time Regulations 1998 (‘WTR’) and the National Minimum Wage Act 1998 (‘NMWA’) and therefore entitled to receive paid annual leave under the WTR and the national minimum wage. In addition, in what is thought to be the first judicial decision on this question, the Tribunal held that the two-year backstop on unlawful deduction claims created by section 23(4A) of the Employment Rights Act 1996 (‘ERA’) is unlawful, having been introduced by regulations which were ultra vires section 2(2) of the European Communities Act 1972 (‘ECA’).
The issues
The claimants’ claims were preceded by three earlier claims presented by Mr M Lange and two other AL drivers (‘the Lange claimants’), which were upheld in September 2017 by an employment tribunal presided over by Employment Judge Pearl (‘the Pearl Tribunal’). AL appealed against the Pearl Tribunal’s decision but the EAT dismissed the appeal and the Court of Appeal refused an application for permission to appeal, holding that the appeal had no reasonable prospect of success in light of the Supreme Court’s decision in Uber BV v Aslam and others [2021] ICR 657.
AL nonetheless refused to accept that the Afshar claimants were workers at any point during the periods in which they had worked for AL. It also contended that, even if the claimants enjoyed worker status prior to 2017, they had ceased to be workers after that date as a result of changes in its business model which had been implemented following the decision of the Pearl Tribunal.
Tribunal’s findings on worker status
The Employment Judge found that test claimants who rented their vehicles from a company in the Addison Lee group were workers whenever they were logged into AL’s software and therefore available to accept work via that software. Having observed that AL had adduced very little evidence about the way its business had operated prior to 2017, the Judge said that he had no reason to come to different conclusions from those reached by the Pearl Tribunal in relation to that period. In relation to the period post-dating the Lange decision, the Judge rejected AL’s contention that changes in its business model had deprived the test claimants of worker status. Crucially, he found that it was not true that AL had stopped imposing sanctions on drivers who refused bookings and concluded that new contractual terms introduced in 2021 which purported to state that drivers were free to refuse jobs did not reflect the reality of the relationship. In addition, the Judge concluded that a theoretical right to “sub-contract” which had also been introduced in 2021 was not inconsistent with an obligation of personal service, because a driver was not permitted to use a sub-contractor or substitute when he was logged on to the AL app.
A minority of the claimants, known as “partner drivers”, provide their own vehicles or rented them from companies outside the AL group. The Judge decided that test claimants who were partner drivers were workers when they accepted specific driving jobs but not throughout the periods during which they were logged in to the AL app. This was because it was possible for partner drivers to log into other private hire apps during those periods.
Limitation periods
The Judge held that the claimants were entitled to carry forward the annual leave to which they had been entitled pursuant to the principles explained by the Court of Justice in King v The Sash Window Workshop Ltd and another (Case C-214/16) [2018] 2 CMLR 10 and applied by the Court of Appeal in Smith v Pimlico Plumbers Ltd [2022] EWCA Civ 70, [2022] ICR 818. He rejected AL’s contention that 12-week fixed-term contracts which it had introduced in 2021 had created breaks in service which triggered limitation periods. In the Judge’s view, it was clear that AL had introduced the relevant agreements specifically with a view to avoiding the effect of the claimants’ statutory rights.
Two-year backstop is unlawful
The Judge held that the two-year limit on the recovery of unlawful deductions imposed by section 23(4A) of the ERA is unlawful, because the regulations by which it was introduced i.e. the Deductions from Wages (Limitation) Regulations 2014 were ultra vires section 2(2) of the ECA. The Judge accepted that it was not in principle unlawful for the Secretary of State to apply a time limit to the enforcement of rights which derived from EU law, so long as the relevant limitation period did not make it more difficult to enforce the EU right than comparable rights under domestic law. However, he went on to point out that that the two-year backstop had been extended to claims under domestic law so as to ensure that its application to claims under EU law would not be a breach of the principle of equivalence. In his view, Parliament did not envisage that section 2(2) could lawfully be used to limit the exercise of rights created by domestic law, particularly where the limitation was imposed for the purpose of ensuring that the relevant instrument could not be challenged under EU law.
A link to the Tribunal’s judgment can be found here.
Oliver Segal KC and Melanie Tether acted for the Claimants, instructed by Michael Newman, Liana Wood and Cecile Jeffries of Leigh Day.
