The Mere Golf Resort & Spa - Tuesday, October 23, 2018

Panel 4 – The employment conundrum – who works for who?

Panellists

Gary Jacobs of Drivertax initiated the discussion of the changing employment situation in private hire. He felt that the trade was being put to death, but gently. In the belief that developments such as autonomous vehicles were not far off “the government is trying to make the death knell of the driver a gentle thing because in their mind it’s coming along soon”.

That apparent gentleness extended to the recently published Taylor report on the gig economy, although private hire had been operating the way it does for a long time, and was not entirely part of the gig economy.

There had been several tribunal decisions that were relevant to the trade, but unlike legal cases, these tribunal cases didn’t create legal precedents.

The recent Finance Act (Section 44) focused on the areas of supervision, direction and control (SDC), Jacobs said. Many operators thought it was their decision what status the workers they engage should have but the government is subjecting it to a test, and in August 2019 we should know what the government believes that test should be as far as self-employment is concerned. This was is likely to come down to the familiar notions of personal service, mutuality of obligation and the level of control. SDC hasn’t yet been defined.

Jacobs’ advice was that even in a changing environment, it was important for operators to decide clearly how to operate, and then to make sure contracts accurately reflected how the work was done in practice.

As the discussion progressed, the wide range of methods used by operators to engage drivers became clear. Debbie Wambergue said that while the industry could support a lot of different operating methods, iChauffeur had settled on using self-employed owner-drivers. They had previously had their own fleet but found that self-employed drivers worked best for them.

Jonny Goldstone explained that Greentomato Cars had three main methods of engaging drivers. Employee drivers were used for the company’s hydrogen-fuelled Toyota Mirai fleet but most drivers rented their cars and shared revenues with the company. Some owner-drivers were also used in order to provide an element of flexibility, and these drivers often drove for other operators as well. Goldstone felt that there needed to be rules that were much more specific to the particular conditions of the private hire industry, rather than for all sectors in general.

Jonathan Dow explained that his company, Club Class Chauffeurs, almost entirely used employed drivers, which he said was “not a scary legal process”. Club Class had been operating for 26 years and now had 80 employees, and hadn’t ever had a tribunal case. He said that they did make limited use of contractors, often ex-employees, but their work only accounted for 5% to 7% of the business.

Jacobs was of the view that while other models dominated in the trade, employing drivers directly could still be a valid approach - “if you absolutely want to supervise and control your staff the best way is still to employ.”

Overall, 73.2% of delegates engaged self-employed drivers, while 10.7% put their drivers on PAYE. A further 10.7% used a combination of self-employed and employed drivers. A further interactive vote showed that 67.3% of delegates allowed their drivers to work for other operators, and 25.5% did not.

Jacobs said that the government seemed to be looking measures such as a “self-employed minimum wage” but overall he didn’t think things would change significantly. Complicated legislation usually created loopholes anyway.

LPHCA’s Steve Wright felt that those protesting against employment conditions in the industry weren’t necessarily speaking for drivers who want the flexibility of self-employment and the choice they have to work for different operators offering different ways of engaging drivers.

Delegate David Pryor, speaking from the floor, said his family firm had been operating since 1955 and had employed drivers even thought this wasn’t the most tax-efficient way of engaging them. He said the position with regard to self-employment had been fairly clear-cut in the past but felt that now some players were trying to maintain the tax advantages of using self-employed drivers but wanted at the same time to exert the sort of control that would apply to employed staff.

In an interactive vote, only 13.8% of delegates thought that private hire drivers should be classified as “workers” entitled to benefits such as sick pay, holiday pay and minimum wage, while 77.6% thought that they should not. In a separate vote, 87.3% thought drivers should be self-employed and responsible for their own affairs and only 7.3% disagreed.

Jacobs of Drivertax said many of the issues arose because to some extent companies were operating a legacy system - a lot of them had started up without really thinking about or planning for the way they run things.