Mr S Shah and Mr S Adjei v United Travel Group Ltd T/a ‘Bounds Taxis’: 3319522/2019 and 3319596/2019
EMPLOYMENT TRIBUNALS
Case No 3319522/2019, 3319596/2019
Between
Mr S Shah and Mr S AdjeiClaimantUnited Travel Group Ltd T/a ‘Bounds Taxis’Respondent
Before
Employment Judge M WarrenDate 13 September 2021
JUDGMENT
The defence of illegality does not succeed.
REASONS
[1]The claimants are taxi drivers. The respondent operates a taxi and private hire business. The claimants drove for the respondent. It is an issue in this case whether or not the claimants were workers as defined in regulation 2(1) of the Working Time Regulations 1998 and s.233(b) of the Employment Rights Act 1996.[2]The claimants’ claims are that the respondent failed to provide them with paid annual leave and rest breaks, contrary to the Working Time Regulations.[3]The case came before Employment Judge Foxwell at a closed preliminary hearing on 11 December 2019. He listed the case for a final hearing in Huntingdon on 22-24 April 2020. He made case management orders.[4]Because of the Coronavirus crisis, the hearing did not proceed on 22 April 2020. A preliminary hearing over the telephone was conducted by Employment Judge Spencer. I do not have before me the employment tribunal file nor do I have a copy of any written summary EJ Spencer may have provided arising out of that telephone hearing. The parties do not have such a written summary either and I would assume that EJ Spencer’s written summary is probably amongst the huge backlog of work that has accumulated for the administrative staff at Watford as a result of the Coronavirus crisis. The parties inform me that EJ Spencer granted the respondent’s opposed application for leave to amend their Grounds of Resistance to include a defence of illegality. He listed today’s open preliminary hearing, (for 1 September 2020 only) to decide whether the claims should be struck out or a deposit order made in light of the illegality defence. On that occasion, the parties agreed that the issue of illegality could be dealt with without witness evidence. Mr Segal for the claimants suggested that it may be more appropriate that the preliminary hearing actually determined the issue of illegality, rather than merely consider striking out or making a deposit order, something with which the respondent subsequently agreed.[5]After the 22 April preliminary hearing, the respondent proposed to call witness evidence and asked for the hearing to be extended into 2 September 2020. The claimants opposed, on the basis that witness evidence was not necessary and Mr Segal would not be available on 2 September. EJ Spencer acceded to the respondent’s request on 15 August 2020.[6]As it happens, the matter was referred to me on 20 August 2020, when I refused the respondent’s request to adjourn this hearing on the basis that the respondent’s principle shareholder and director, Mr Wright did not have time to prepare for the hearing or attend because of the impact of the Coronavirus crisis on his business. Documents and evidence before me[7]I had the following documents and evidence before me:7.1 A bundle of documents prepared by Mr Paulin.7.2 Witness statement of Mr David Wright.7.3 Witness statement of Mr Phillip Bayliss.7.4 Skeleton argument from Mr Paulin.7.5 Skeleton argument from Mr Segal.7.6 The claimants’ bundle of authorities.7.7 Respondent’s bundle of authorities.7.8 Respondent’s additional bundle of authorities.7.9 Separate copies from Mr Paulin of reports in the cases of Crombach v Bamberski, Vacante v Addey and Stanhope School and Courage Limited v Crehan.7.10 A pdf file containing additional documents from the claimants, (2018 and 2019 tax returns).7.11 A pdf file containing additional documents from the respondent, (booking totals).[8]There were no witness statements from the claimants.[9]Mr Bayliss did not attend to give evidence. Mr Wright did attend; he tendered his witness statement under oath, but was not subjected to cross examination.
The Issues
[10]The parties agree the issue before me is whether the claimants have illegally performed their contracts with the respondent and they should not therefore be permitted to proceed with their claims. At paragraph 1 of his skeleton argument, Mr Paulin puts this as an application for a strike out pursuant to rule 37(1)(a). The grounds for strike out at rule 37(1)(a) are that the proceedings are scandalous, vexatious or have no reasonable prospects of success. However, as noted above, in our preliminary discussions the representatives informed me that the issue was not one of striking out on the grounds of prospects of success, but was that I should determine the issue of illegality. The issue is therefore whether the claims should be dismissed because they are founded on illegal performance of the contract.[11]The illegality is that in their tax returns, the claimants have under declared their annual income from their work for the respondent. It is not disputed that they have done so. This was discovered as a consequence of the claimants disclosing their tax returns in compliance with an order made by EJ Foxwell, who was persuaded that how the claimants described themselves and their relationship with the respondent in their tax returns would be of relevance to the issue of status.[12]The respondent says:12.1 The contract between the claimants and the respondent contained an express term that claimants would comply with their legal obligations in respect of their tax affairs.12.2 It is crucial to the respondent’s business model that those who drive for them are honest in their tax affairs.12.3 By understating their income to HMRC, the claimants performed their contract illegally and in breach of an express term of the contract.12.4 If the claimants are found to be workers, the respondent will be potentially vulnerable to prosecution under the Criminal Finance Act 2017 for failing to prevent the facilitation of tax evasion.12.5 The defence of illegality should succeed in order to maintain the integrity of the legal system and uphold the public policy of ensuring that people accurately declare their income to HMRC and pay the correct amount of tax.[13]The claimants say:13.1 There has been no illegal performance of the contract. The claimants work for the respondent was legal and they were properly and lawfully paid for their work.13.2 Even if there were a term in the claimants’ contract that they would complete their tax returns accurately and honestly, (which is denied) that they may not have done so does not render the performance of the contract, (conveying passengers in return for remuneration) illegal.13.3 Even if the performance of the contract was illegal, the public policy of:(1) enabling the enforcement of employment rights,(2) in particular those related to health and safety, (holiday pay to encourage taking holiday and the requirement for rest breaks) and(3) upholding treaty obligations, in this case outweigh the public policy of ensuring tax returns are completed accurately and the correct amount of tax paid.13.4 It would not be proportionate to deny the claims because: (1) the illegality has nothing to do with the overall contract purpose, (2) the facts of this case fall far short of the typical case of tax avoidance schemes resulting in employees not being permitted to enforce their employment rights, and (3) there is an existing criminal process for enforcing tax evasion which has been implemented, (the claimants have been fined by HMRC).
The Facts
[14]The witness statement evidence of Mr Wright and Mr Bayliss was unchallenged. With that in mind, I find the facts relevant to the issue which I must decide or by way of contextual background are as set out in the paragraphs below.[15]The respondent’s business is that of a vehicle private hire operator. Private hire drivers utilise its booking system and platform and thereby, transport customers to their desired locations in return for a fare. The respondent utilises software developed by Mr Wright.[16]A significant element of the respondent’s business is to provide transport to large organisations who hold accounts with it, such as local authorities.[17]It is important to the respondent that it has a reputation of operating ethically. This is particularly important in order to facilitate obtaining contracts with public bodies, such as local authorities. It is therefore important to the respondent that its drivers operate in a legally compliant and honest manner.[18]With that in mind, the respondent employed an ex-police officer and former principle licensing officer with a local authority, Mr Bayliss.[19]With Mr Bayliss, the respondent developed an induction process for new drivers which involved an initial meeting at which their ID and licence information was checked, followed by what is described as a, “formal on-boarding meeting”. At that meeting, Mr Bayliss made clear to drivers that they were responsible for any requests for information regarding their takings from HMRC. Drivers were told that any attempt to take advantage of their status, (as they saw it) as self-employed individuals to perpetrate a fraud on HMRC, would not be tolerated. They were told it was a condition of their agreement with the respondent that they would remain compliant with their tax obligation and if they were found to give false information, their relationship with the respondent would cease.[20]Mr Shah attended such an on-boarding meeting. I am unable to find that Mr Adjei attended such a meeting as there is no direct evidence that he did so. Mr Bayliss’ evidence was that he recalls Mr Shah attending such a meeting but that he does not recall Mr Adjei doing so. Mr Paulin said in submissions that Mr Adjei in his pleadings accepts that he attended an induction course: it is true that at paragraph 3 of the Particulars of Claim, Mr Adjei refers to being welcomed on to the team and given a short induction. However, whether that is the initial meeting or the second meeting referred to as on-boarding is not clear and so I make no finding.[21]Mr Shah has worked for the respondent on and off over the years, but his latest relationship with the respondent began on 22 November 2016. Mr Adjei has worked for the respondent since 6 February 2017. The relationship for both with the respondent was terminated by the respondent on 30 March 2020.[22]The respondent produced a contract called, “Terms and Conditions for BidTaxi Limited Partners”. The document is copied in the bundle starting at page 618. I note this copy states that it was last updated on 6 August 2019. There is no evidence before me that these written terms and conditions were ever expressly agreed to by the claimants. However, at paragraph 27 of his witness statement, Mr Wright states, “All this did was to record in writing that which had already been agreed …. at the on-boarding meeting”. That is unchallenged evidence and therefore I find it to be so.[23]Clause 6.6 of the terms and conditions, (referred to by the parties as the Payment Agreement) reads as follows: “Tax obligations – Partner is fully and exclusively responsible for compliance with all applicable (local) tax laws and obligations in relation to the provision of Passenger Transport Services pursuant to the terms, including in relation to any Driver using Partner’s account or anyone employed or engaged by Partner in the provision of Passenger Transport Services. Partner will indemnify and keep BIDTAXI LIMITED AND/OR UNITED TRAVEL GROUP LIMITED indemnified against any costs (including legal costs), claims, damages, penalties, liabilities, expenses, proceedings or interest BIDTAXI LIMITED may suffer or incur as a result of Partner’s failure to comply with this obligation.”[24]On 3 March 2020 the respondent changed its name from BidTaxi Limited to United Travel Data Services Limited. Upon doing so, it produced a new Payment Agreement, which begins in the bundle at page 628. Clause 1.6 now reads: “For the avoidance of doubt, in accepting this agreement you also accept that, when working as a self-employed driver under an agreement to which United Travel Group Limited was a party (whether before or after the advent of the United Travel Data Services/BidTaxi platform) it was always a fundamental term of that agreement between you and United Travel Group Limited (and any other party to that agreement) that you would adhere to all local tax laws and HM Revenue and Customs Rules and Regulations and bear sole legal responsibility for doing so. Further, you confirm that you have always and will continue to comply with that fundamental term.”[25]In order to keep the chronology in perspective one should keep in mind that these proceedings were issued on 21 June 2019 and the respondent obtained copies of Mr Shah’s tax returns pursuant to EJ Foxwell’s order, on 3 March 2020. Mr Adjei’s copy tax returns were disclosed on 20 March 2020.[26]Also on 8 March 2020, the respondent produced a further contractual document entitled, “Private Hire Operator & Partner Agreement”. Clause 2.1 of which stated: “This Agreement establishes a relationship between the Partner, a licenced private hire vehicle driver, and the Operator, a licence to private hire operator, and sets out the terms of that relationship.”[27]Clause 3.4 reads: “The Partner acknowledges it is solely responsible for the payment of any due income tax, national insurance or any similar deductions or duties, including any other liabilities, assessments, penalties, costs and claims in respect of the provision of its Services to the Operator.”[28]Clause 3.7 reads: “The Partner acknowledges that they will declare their full self-employment turnover income in their yearly tax return to HM Revenue and Customs.”[29]Each week a driver would log into the respondent’s portal and pay a cost for its services in the sum of £175. In the portal, before proceeding, the driver had to click to indicate his or her agreement to the new, “Payment Agreement” and the, “Operator and Partner Agreement”. Mr Adjei clicked to agree on 9 March 2020 and Mr Shah on 10 March 2020.[30]On 30 March 2020 Mr Wright emailed Mr Adjei and Mr Shah to terminate their contract with the respondent on the grounds that: “It has always been a fundamental term of the agreement with any driver that they are compliant with respect to their own obligations to HMRC are selfemployed persons. You confirmed your agreement to this term in writing when you assented to the platform agreement during week commencing 9 December 2019. On 8 March this agreement was updated to ensure clarity that this was always a fundamental term between the parties. On week commencing 9 March you confirmed that you agreed to this term. The tax return information that you provided shows that it is more likely than not that you have violated this term.”[31]The following figures in respect of the claimants’ tax returns are not disputed:31.1 For the tax year 2016/2017 Mr Shah received takings of £34,403 and declared his income to the Inland Revenue at £12,793.31.2 For the tax year 2017/2018 Mr Shah’s takings were £46,017 yet he declared £14,493. Mr Adjei’s takings were £54,247 but he declared to the Inland Revenue on his tax return a figure of £21,106.31.3 For the tax year 2018/2019 Mr Shah received takings of £41,380 but he declared to the Inland Revenue just £16,235. Mr Adjei received £58,898 and declared £26,190.[32]The claimants have filed updated tax returns and have paid fines.
The Law
[33]The classic statement relating to illegality in Contract Law is that of Lord Mansfield in Holman v Johnson [1775] 1 Cowp 341: “No court will lend its aid to a man who founds his course of action upon an immoral or an illegal act.”[34]In the context of Employment Law, the seminal case on the application of the doctrine of illegality, reviewing and drawing together single statement of the law in earlier cases, is Hall v Woolston Hall Leisure Ltd [2001] ICR 99 503. In that case, Mrs Hall claimed discrimination by reason of pregnancy and unfair dismissal. The Employment Tribunal held that the contract of employment was tainted with illegality because she had turned a blind eye to the fact that the respondent was not paying tax on part of her income.[35]At paragraph 29 Gibson LJ quotes Lord Browne-Wilkinson from the case of Tinsley v Milligan [1994] 1 AC340, in the context of a claim in contract: “… the claimant cannot found his claim on an unlawful act. But when the claimant is not seeking to enforce an unlawful contract but founds his case on co-lateral rights acquired under the contract the Court is neither bound nor entitled to reject the claim unless the illegality of necessity forms part of the claimant’s case.”[36]Three categories of unenforceability due to illegality are considered in the context of a contract claim:36.1 Where the contract is entered into with the intention of committing an illegal act;36.2 Where the contract is expressly or implicitly prohibited by statute, and36.3 Where a lawfully made contract is illegally performed and the party knowingly participated in that illegal performance.[37]At paragraph 38 Gibson LJ said: “In cases where the contract of employment is neither entered into for an illegal purpose nor prohibited by statute, the illegal performance of the contract will not render the contract unenforceable unless in addition to knowledge of the facts which make the performance illegal the employee actively participates in the illegal performance.”[38]In the context of statutory tort, (in Hall, sex discrimination) Gibson LJ said at paragraph 42 that the correct approach in a discrimination case should be to consider whether the claimant’s: “Claim arises out of or are so clearly connected or inextricably bound up or linked with the illegal conduct of the applicant that the Court could not permit the applicant to recover compensation without appearing to condone that conduct.”[39]However, since Hall the Supreme Court has reviewed the law relating to illegality generally, in the case of Patel v Mirza [2016] UKSC42. I quote the Lead Judgment of Lord Toulson at paragraph 120. “The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, b) to consider any other relevant public policy on which the denial of the claim may have an impact and c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment as a matter for the criminal courts.”[40]Lord Toulson identified two policy objectives in respect of illegality, (paragraph 99)(1) a person should not be allowed to profit from his own wrongdoing and(2) the law should be coherent and not self-defeating nor condone illegality. He stated at paragraph 107 that courts should keep in mind the possibility of overkill unless the law is applied with the due sense of proportionality.[41]The impact of Patel v Mirza in the field of Employment Law has subsequently been considered by the Court of Appeal in the case Okedina v Chikale [2019] EWCA Civ 1393. The Court of Appeal consisted of Lord Justice Underhill, Lord Justice Davis and Lady Justice Nicola Davies. Judgment was given by Lord Justice Underhill.[42]The case involved claims of unfair and wrongful dismissal, unlawful deduction from wages, unpaid holiday pay, various breaches of the Working Time Regulations and race discrimination. I note at paragraph 4 that Underhill LJ noted that all such claims except the discrimination claim, can be characterised as, “contractual” in that they are either made under the contract of employment or arise out of it, (applying Hounga v Allen [2014] UKSC47).[43]In considering the impact of Patel v Mirza, at paragraph 62 Underhill LJ said that it does not require a reconsideration how the rule relating to illegality has been applied in previous case law, except where such application is inconsistent with the principals set out in Patel v Mirza. Thus, there is nothing inconsistent in Patel v Mirza with, “the wellestablished approach in Hall as regards third category cases”.
Discussion and conclusions
[44]Mr Paulin argues, by reference to Patel v Mirza, that tax evasion is a serious matter. He says that it is an anathema to the enforcement of the purported rights to holiday pay and rest breaks, that a party to the contract in question should commit the common law offence of cheating the public revenue in breach of the contract upon which those rights are said to depend. He points out that the respondent was completely unaware of the claimants’ illegal conduct and terminated its contract with the claimants upon discovering it. He says that is a venerable principal of Tax Law that there is a public interest in taxpayers paying the correct amount of tax, (citing Tower M Cashback LLP & Another v Revenue and Customs Commissioners [2011] UKSC19 per Lord Walker at paragraph 16).[45]On the question of other relevant public policies which may be rendered ineffective or less effective by denying the claim, Mr Pauline argues that enforcing rights under the Working Time Regulations are less of a barrier than they would be were the claims based on discrimination, (citing Hall v Woolston Hall Leisure Ltd and Blue Chip v Helbawi [2009] IRLR 128).[46]In respect of the required consideration to apply the law with a sense of proportionality, he points to the fact that the contract between the parties contained an express term or condition that the claimants would be legally compliant with regards to their tax obligations. He points to the sums of money involved. He points to the potential for the respondent to be held responsible for facilitating tax evasion. He says that the tax evasion must have been deliberate. He points out that the claimants have submitted Schedules of Loss based upon their actual takings, rather than the significantly lower figures for takings declared originally to the Inland Revenue.[47]Mr Paulin says that it is the role of Judges to preserve the rule of law and that the court system should ensure legal harmony and consistency. He stresses that this is not a minor matter, it strikes at the heart of tax fraud.[48]In my judgment, this case is not founded on an illegal act, (Holman v Johnson). The basis of the claim is not something which the claimants have done illegally.[49]I find the reference to Hall and indeed all the preceding case law cited, unhelpful. This is because all the cases cited relate to situations where, (with the exception of Coral Leisure Group Ltd v Barnett [1981] ICR 503 – the claimant procuring prostitutes for customers outside his duties under his contract of employment) in which the employer is the instigator and the issue arising is the degree of the employee’s participation and/or knowledge. What we have here, it seems to me, is a unique and unusual set of facts, (in terms of case law). I consider that the appropriate approach to adopt is that commended to all Judges in all jurisdictions by the Supreme Court in Patel v Mirza. I consider in turn each of the three questions posed. What is the underlying purpose of the prohibition which has been transgressed and will that purpose be enhanced by denial of the claim?[50]The underlying purpose of the requirement to accurately declare one’s income to HMRC in a tax return is to ensure everybody pays taxes which are lawfully due on the income that they receive. It is fundamental to civilised society that people pay their taxes and are not able to evade them by cheating. Denial of the claim, (and potentially of such claims in the future) would discourage putative workers from under-declaring their income to the Inland Revenue in case they lost their employment rights. Is there any other relevant public policy on which the denial of the claim may have an impact?[51]The claims are for holiday pay and a complaint of failure to provide rest breaks. These are matters of health and safety and pertain to the wellbeing of workers. The purpose is to ensure that workers are encouraged to take holiday for rest and recuperation, and that they are provided with rest breaks during a long working day.[52]Workers health and safety should be ensured it seems to me, notwithstanding that they may be evading tax. That seems to me to be the overriding consideration. However, considerations such as that English law should be interpreted so as not to place the country in breach of its international obligations, that English law should be interpreted so as to comply with EU Directives and indeed Universal Declaration of Human Rights, also arise. Would the denial of the claim be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts?[53]Tax evasion is subject to its own enforcement jurisdiction.[54]Those enforcement provisions have been brought into play with the claimants, who have been fined.[55]The essence of this contract is to convey passengers using the respondent’s software for which both claimants and respondent receive remuneration.[56]If the claimants are workers, they should receive holiday pay and be afforded rest breaks. To not give them that because they have falsely completed tax returns is in my judgment, disproportionate, given the importance of holidays and daily rest from a health and safety perspective and the existence of an enforcement regime for tax evasion.[57]To do otherwise would suggest that every worker must submit his or her tax returns for scrutiny before being permitted to enforce their employment rights. That would amount to overkill.[58]The claimant’s conduct in under-declaring their income is deplorable and they get no sympathy from me. However, I do not consider that by allowing the claims to proceed, I would be endorsing the claimants conduct. It would not be contrary to the public interest to enforce the claims and to do so would not harm the integrity of the legal system.[59]For these reasons, I find that the defence of illegality should not succeed and the claims will now proceed to be heard as scheduled on 26-29 April 2021 when an Employment Judge will decide whether or not the claimants were workers and therefore, whether or not they were wrongly denied rest breaks and holiday pay.
Discussion and conclusions
[1]Both Claimants make claims under the Working Time Regulations 1998 and Section 230(3)(b) of the Employment Rights Act 1996, claiming paid rest breaks and paid holiday on the grounds that they are truly workers and not self-employed.[2]The Claim is resisted by the Respondents on the grounds that they are self-employed contractors providing technology called ‘iCabbie’ for a fixed fee of £175 per week to enable the Claimants Drivers to receive passenger or private hire.[3]In this Tribunal we have heard evidence from both Claimants giving their evidence through prepared witness statements.[4]For the Respondents, although a number of witness statements were tendered, only Mr Wright, Director of the Respondent; Mr Russell, a Share Holder with the Respondent; Mr Ward and Mr Sanderson, both Drivers for the Respondent, actually gave live evidence all through prepared witness statements.[5]The Tribunal also had the benefit of a main Bundle consisting of 824 pages and a Supplemental Bundle consisting of 498 pages. It has to be said, in the Supplemental Bundle from pages 398 to the end it was impossible to read any of those documents, as was pointed out as the print was so small. Likewise, in the main Bundle, particularly page 373 through to page 503, again was impossible to read. It does beg the question by any objective assessment why those documents would have been put in the Bundle as clearly it was impossible with normal eyesight to read those documents. Furthermore, it is becoming increasingly of concern that Bundles for Hearing are now becoming almost unmanageable in terms of the extent and size of them in circumstances where the reality is, in the course of the Hearing, the vast majority of those documents no reference is made at all, as was in this case. Putting it bluntly, the Claimants’ reading list consisted of no more than 20 pages and the Respondent referred to the Pleadings, the Witness Statement and the Agreed List of Issues.[6]The Tribunal also had the benefit of an opening submission on behalf of the Claimants together with one on behalf of the Respondent.[7]There were also written closing speeches on behalf of both Claimants and the Respondents for which I am grateful as they were helpful.
The Facts
[8]Mr Shah, the First Claimant, is a Private Hire Driver. The Respondent is a Private Hire operator in the business providing transportation services to the public. The Claimant started work for the Respondent on 28 July 2011, has left the company on various occasions since that date and rejoined on 22 November 2016 and has been employed with the Respondents since that date.[9]It would appear this Claimant works for the Respondent on a regular basis from Monday to Saturday working quite long hours and the Claimant occasionally works on Sundays.[10]Mr Adjei, the Second Claimant, is also a Private Hire Driver and commenced his engagement with the Respondents on 6 February 2017. The Second Claimant clearly worked for the Respondents on a regular basis, Monday to Saturday, long hours and occasionally works on Sundays.[11]Each Claimant will start work each day by logging onto a system called iCabbie which is an App provided by the Respondent for a rental fee of £175 per week regardless of the hours worked and each Claimant ends their shift by logging off the App.[12]The Respondents promote the brand ‘Bounds’ and through the App iCabbie it requests for passenger transport services, they also have a number of Accounts and all potential passengers can telephone the Respondents through the Bounds name. Bounds Taxis was originally formed in 1958.[13]The Respondents have a number of employed Managers and Despatch Controllers who communicate with the Respondent’s Drivers, of which there are over three hundred. The rental for the App iCabbie which provides details of the passenger and location and fare is £175 per week, it is not negotiable. The only time it does not become payable is if a Driver is taking holiday for one week or more. There is some doubt as to whether there is any pro-rata payment for weekend only payment, that was not clear from the evidence.[14]What is clear is if the rental becomes payable by each Driver on a Monday. The latest date to pay is Tuesday. If a Driver fails to pay by Tuesday, a penalty of £10 each day is then added.[15]It would appear that Drivers starting for the Respondents, in reality the Bounds trade name, will be given what is commonly known as ‘on boarding’. That is an induction following the handing over of appropriate documents, necessary to become a Private Hire Driver, to the Respondents which are kept at the Respondent’s offices. Indeed, Mr Adjei indicated that if you did not attend the ‘on boarding’ induction session, you would be logged off the iCabbie App as not attending which meant you could not obtain work. This indeed happened to Mr Adjei who was told by a Despatch Controller of the need to attend. Once he had attended this session, Mr Adjei’s App was turned back on which enabled him to earn a living and some taxi fares. It would appear, the Controller Despatcher allocates jobs through the iCabbie App and it would appear you could only obtain work and jobs through the App. Each Driver did not have their own business card so the allocation of jobs came through the App via the Despatcher by the trading name of Bounds whom customers contacted.[16]It would appear, all the advertising and marketing for the Respondents was through Bounds Taxis’ trading name.[17]Clearly the Driver had to stay logged on to the App in order to pick up work. If a Driver logged off the App he would not receive alerts for nearby jobs. The Drivers could only accept passengers through the App and all jobs were allocated through the App. Drivers would not be allowed to take jobs outside the App.[18]Bounds had the ability to log off Drivers as a penalty for a number of reasons. If a Driver missed a particular job or declined it, he would be logged off the App for a certain amount of time.[19]Another reason for being logged off and thus penalised was where there was a no show which was an option on the App the Drivers could select if they arrived to collect a passenger who did not materialise. In those circumstances a Driver then had to wait five minutes and mark them on the App as a no show. The Driver would then have to wait for one of the Bounds’ Despatchers to approve the no show request in order to allow the Driver to continue taking new jobs. It is clear there were occasions when a Controller would take a long time to update the status (page 218) so Drivers would call Control to speed up the process. In the intervening period the Driver could not take another job whilst waiting.[20]It was also the case that Bounds, or the Respondent, had the power to penalise Drivers if they missed a job or decided not to accept a job. They would again be logged off the App for a period of time.[21]There were penalties for not wearing the Company Bounds uniform which had to be purchased from the Respondent. Clearly marketing Drivers as Bounds, these were polo shirts and fleeces, for failing to wear the uniform a Driver could be logged off and therefore unable to work. Examples of notices are at pages 212 and 213 in relation to uniform which clearly states, “…if individuals do not wear uniforms and were caught they would receive a penalty of three hours”.[22]The App works on the basis that a Driver will receive a notification for a new job, he then has an option to either accept or decline the job. It is possible to completely miss a notification for a new job, for example where the signal is bad or a Driver has not checked his phone in the time period the job alert flashed. Again, the Driver would be penalised by the Despatcher Controller for this and logged off the App for a period of time.[23]It is clear that Bounds settle the fares for jobs and the Drivers have no control over fares. This meant a Driver could not negotiate fares direct with passengers and Drivers had to accept discounts that were being offered by Bounds in their marketing material.[24]There was also a rating system on the App where passengers could rate the Driver’s service (page 196). These were sent direct to Bounds. The process was entirely in the hands of Bounds.[25]To be clear, the fares are set by Bounds. The Driver has no control of them, when a Driver picks up a passenger he will press ‘passenger on board’ and the meter will run and the fare will already have been set by Bounds.[26]Bounds also had set fares for family members and members of the Management Team. The Drivers had no control of this and it would be regardless of how long it took to complete a job.[27]Bounds carried out random spot checks on cars to ensure Drivers were wearing the uniform and notices were sent out on Bounds’ headed paper warning Drivers that spot checks were possible, making it clear that if a Driver was not wearing their uniform or has an unclean vehicle, he would be logged off the App.[28]It was clear that if a Driver declined a job, there was no option to substitute themselves another Driver, the Despatcher would decide who then had that job. In any event, when being notified of a job, it would be impossible to consider a substitute if a Driver wished to decline the job, there would simply be no time.[29]There clearly was, once you had logged on, an expectation through the Bounds iCabbie that a Driver would be offered a job and be expected to accept it. If he did not he would be penalised by being logged off.[30]The Claimants were also required to place a Bounds logo on their cars whilst they were working and a sticker advertising Bounds on the door of their cars. Again, notices was sent out warning Drivers that without signs on their cars, they would not be allowed to pick up any passengers (page 200).[31]It is noticeable, after the claims were issued that Bounds attempted to provide a written contract (page 519 – 528). Drivers had no option but to accept those terms if they wanted to continue working as a Driver in the name of Bounds.[32]It is clear the nature of the job means there was some waiting time between jobs, or when a Driver was logged off the App. If a Driver wanted to take a lunch hour, they would have to either log off the system or alternatively if they declined a job, then they would be logged off in any event as a punishment.[33]It is clear, each of the Claimants were working throughout the week as Drivers for the Respondent. Mr Adjei did also work as a part time cleaner, but that did not interfere with his normal working schedule with the Respondents.[34]If a Driver became a VIP Driver, it appeared you had to apply, then they would wear different uniforms.[35]What is clear, where Drivers had cash payment Bounds would earn 10p per fare, on credit card bookings Bounds would earn between 5 – 10%, and on Account work again Bounds would receive 10%. This was imposed by the Respondents and Drivers had little or no say.[36]The only evidence of proper meetings between Drivers and Management of Bounds Taxis is at page 814 and 815, on 9 August 2018, at which a number of matters were discussed. Particularly the 20p booking fee, the Respondents confirmed that would stay and that was split between the Drivers and the Respondents 50:50.[37]Again Drivers were told that with Accounts customers, a deduction of 10% would be taken from the Drivers and paid to Bounds Taxis. That money, in any event in the first place, was sent to Bounds and then paid over to Drivers. Drivers were told that waiting time would not be recovered.[38]Drivers were at the above meeting again told to still wear the uniform whilst working and they were informed again that anyone not wearing their uniform would be logged off immediately. Furthermore, if the same Driver was caught on the same day, again not wearing their uniform, there would be an automatic 24 hour log off.[39]The Respondents informed Drivers with credit card bookings which had been declined that it was not possible to get pre-payment.[40]With regard to credibility, a lot has been made by both Counsel in this case about the credibility of witnesses. Particularly Counsel for the Respondent went to some considerable length in his cross examination of both Claimants about their under declaration to the Inland Revenue in relation to their turnover. For which both Claimants have been fined and the matter now addressed with HMRC.[41]In relation to the Respondent’s witnesses, their evidence was largely unhelpful, disingenuous and evasive on occasions.[42]The Tribunal has therefore based its decision on what is the reality of the situation between the Drivers and the Respondent, as in part supported by some documentation in the Bundle.
The Law
[43]The right to claim by the Claimants in these proceedings are rights under the Working Time Regulations 1998, the right to be classified as a ‘worker’ as defined by Section 230 of the Employment Rights Act 1996, which describes a worker as, “…an individual who has entered into, or works under-(a) a Contract of Employment; or(b) any other contract. Under this contract, you undertake to personally do or perform any work or services for a party to the contract (your employer).”[44]Regulation 2 of the Working Time Regulations 1998, “… “worker” means an individual who has entered into or works under (or, where the employment has ceased, worked under) –(a) a contract of employment; or(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual; and any reference to a worker’s contract shall be construed accordingly.”[45]The statutory definitions are not particularly helpful in guiding Courts and Tribunals on the issue of ‘worker’, ‘employee’ and ‘self-employed’ status.[46]Therefore the Courts and Tribunals have to look to Case Law and in Givraj v Hashwani [2011] UK SC4 [2011] ICR 1004, in which the Supreme Court held that, “the correct test is whether the Contract provides the services to be rendered by an independent Contractor or whether the service provider consents to work under the control of another, and is therefore a ‘worker’. The Court concluded that an arbitrator was outside this definition, notwithstanding that he provided personal services and received fees due to a lack of control or subordination.[47]In Halawi v WDFG UK Limited, t/a World Duty Free [2015] IRLR50, the Court of Appeal held that a Beauty Consultant who provided her services to a cosmetics company via a limited company and an employment agency and who had exercised her right to substitute performance, was not a ‘worker’ and so was unable to bring a claim for discrimination. The Court emphasised the requirements of personal service and subordination.[48]In a very recent Uber case before the Supreme Court [2021] UKSC5, on Appeal from the Court of Appeal, the Supreme Court held the Court of Appeal’s decision that Uber Taxi Drivers were indeed ‘workers’. In that case Uber argued that Drivers were self-employed and they merely provided a technology platform that allowed Drivers to find agreed work with individual passengers. Closing Submissions Respondent[49]Mr Skudra, for the Respondent, suggests that the Tribunal ought not to slide towards a contrast and compare with the Uber Judgment. Instead, it ought carefully to interpret the statutory provisions from all the circumstances of the case, the agreement between the parties being only part, as stated at paragraph 84 of the Uber Judgment which cited paragraph 35 of the Autoclenz Judgment. Furthermore, the Tribunal should not adopt a bespoke approach by contrasting and comparing the Uber case when in fact the circumstances of this case are not a check list against other cases.[50]In this case it is submitted that the Respondent provides iCabbie as a tool for a fixed fee of £175 per week to enable the Claimant Drivers to earn for themselves, a living. Which is in fact radios and pens and paper which was formerly used before the onset of technology. The Respondent providing services to the Drivers under a Contract concluded between them and then separately a Contract arises from the provision of services between the Drivers and passengers for each journey.[51]Mr Skudra submits there is simply no mutuality of obligation. Drivers could drive as and when they wished. Drivers would indicate their availability by logging into iCabbie and the Drivers were under no obligation to accept work and nor were the Respondents under an obligation to offer any.[52]Looking at the economic reality test, the Claimants provided their own equipment, cars, insurance and fuel. The Respondent’s service costs were fixed for a shared 20p booking fee and the iCabbie fixed cost of £175 per week. In relation to Account, the charge was to the Account holder and the Respondent made a 10% charge to Account holders directly. The Drivers then being paid the fare incurred by Account customers. The fact that the Claimants represented themselves as self-employed highlights the understanding the relationship between Drivers and the Respondent.[53]Mr Skudra accepts there is some element of control, that was for good commercial reasons.[54]Finally in terms of integration, the Claimants were not in any significant way integrated within the system of working in the Respondent. Particularly, the Respondents could continue their business without any input whatsoever from Drivers. In all the circumstances, the claim should therefore be dismissed. Claimants[55]Miss Malick submits in relation to mutuality of obligations that the Claimants had expressly or impliedly agreed to be subject to a sufficient degree of control for the relationship to be one of master and servant. The Respondents appointed a Driver Manager who gave instructions on operational matters, including expectation on uniform wearing, car cleanliness, pick up time, waiting time and obtaining tips.[56]The Contractual document post claim does not reflect the reality of the parties’ positions and the Drivers were clearly in a subordinate position. There was no evidence the Claimants independently marketed themselves. The Claimants had identifiable patterns of working. Clearly there was mutuality of obligation from the time the Drivers logged on. The expectation to be provided with work.[57]Furthermore, obligations were enforced by the Respondents through the use of penalties. The fact that there was a personal Contract which was a dominant feature and is irrelevant that there was no fixed hours of work. The real question being whether there was any minimum amount of work which the Claimants had obliged themselves to do.[58]In relation to expectation, plainly they had to apply to the Respondents to become Drivers and following that expected to be offered work when they logged on for sufficient hours to make it worthwhile.[59]The economic reality was that they had to work full time in order to make a living and pay the £175 rental per week to make it worthwhile because that equates to £9,000 a year. The fares being based on time and distance calculated by the iCabbie App and Drivers had no input into that.[60]The control existed and can be seen from the expectations from the Respondents, uniform and penalties for not wearing, the cab sign both on the roof and on the side and again penalties for not displaying them, if Drivers refused a job they would be logged off for a period of time and spot checks on vehicles.[61]In relation to integration, Miss Malick submits the Drivers were providing their services as part of the Respondent’s undertaking and itself put the Drivers at the Respondent’s disposal. The Claimants were not able to market themselves to any other Private Hire company. Again, the obligation to wear Bounds uniforms and drive cars with Bounds signs. The fact that all booking was through Bounds, transactions were made on credit card bookings and Account jobs by Bounds. Bounds would also take 10p per fare fee for cash payments.[62]Miss Malick submits that for all these reasons there can be no other interpretation other than the fact that they are clearly ‘workers’.
Conclusions
[63]It is true that the Claimants have to establish an irreducible minimum of obligation. Each day the cabbies log on and commence their daily work they log on to a system called iCabbie which is the App provided by the Respondents for a rental fee of £175 per week regardless of the hours worked by each Claimant. At the end of the shift they log off the App. Therefore as soon as each claimant logs on they are under an obligation to take the jobs provided and if they do not they will be clearly disciplined by being logged off the system. Clearly whilst logged on to the system there is an obligation by the Claimants to work for the Respondents by taking the jobs offered.[64]It is also clear certain documentation such as licences and insurance have to be brought to the Respondents office before they are allowed to work for the Respondents. It is also clear that the Drivers are required to wear the Bounds uniform which consists of polo shirts and fleeces. If they fail to wear the uniform the driver will be logged off and therefore unable to work. This is an example of the Respondents being able to discipline the Claimants, indeed notices were displayed (pages 212-213) in relation to the wearing of the uniform which clearly stated, “If individuals do not wear uniforms and were caught they would receive a penalty of 3 hours”. That means they would be logged off for 3 hours and therefore not available for jobs. Clearly a disciplinary sanction imposed by the Respondents.[65]Furthermore, if for any reason a Driver missed a job or decided not to accept a job again they would logged off the system for a period of time.[66]The Drivers’ cars had to exhibit the Bounds symbol or advertising logo. The Respondents marketed the business under the Bounds name and each individual Driver was not allowed to market themselves. Furthermore, Bounds clearly set the fees and a Driver does not have the power to negotiate the fees direct with passengers. The Drivers had to accept discounts that were being offered by Bounds in the marketing material.[67]It is also the case that Bounds exercised control over the Drivers in having random spot checks on cars to ensure that Drivers were wearing the uniform and that the cars were exhibiting the Bounds name.[68]It is also the case that if a Driver declined a job there was no option for that Driver to substitute themselves for another Driver in their place. The Respondents would decide who would get that job.[69]The reality of the situation was that the Respondents controlled the Drivers to such a degree there clearly was on overarching contract between the parties.[70]In relation to account jobs the Respondents charged the account holder and the Respondents then make a 10% commission charge thereafter the sum is paid to the Drivers.[71]The fact that the Claimants may have represented themselves as selfemployed is irrelevant. It is clear from the factual basis that each Driver had no choice, that was imposed upon them by the Respondents no doubt to avoid any potential employer-employee obligations.[72]It is not the case that the Drivers/Claimants had substantial autonomy and independence, clearly paying a rental of £175 per week required them to provide their service on a regular basis by logging in to make it economically viable.[73]It is therefore clear taking all the factual basis into account that the Claimants were to a significant extent integrated within the system of working for the Respondents.[74]Taking all the realities of the situation into account, the way the Drivers were subjected to control and direction by the Respondents there quite clearly was an irreducible minimum of obligation which points to them being workers without doubt. JUDGMENT on REMEDY Further to the Reserved Judgment of Employment Judge Postle sent to the parties on 20 September 2021, at the request and by consent of the parties, the Tribunal Orders the Respondent to pay the following sums in settlement of the Claimants’ claims:a.£1,528.00 to the First Claimant (Mr Shafqat Shah); andb.£11,174.40 to the Second Claimant (Mr Samuel Adjei). 8 March 2022