Out on your own
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Drivers facing redundancy are frequently asked to become owner-drivers for their former employers. But be wary of the taxman—he may question whether you are really `self-employed'.
The prospect of redundancy is a daunting one. And given the delicate state of the economy and in haulage the frequency with which contacts are won and last by operators, it is one which is unlikely to disappear, so any apparent lifeline is at the very least going to tempt drivers when life on the dole looms ahead.
In recent months CMhas carried several reports of redundant haulage staff setting up on their own, sometimes to do the same work they did before. A few reports might not amount to a trend, but it is a feature of haulage in the early 1990s.
When Spalding Agricultural Holdings closed its in-house transport operation and handed the business to ANC, 10 drivers were left looking for new work Distribution manager Dave Bryson says the company felt obliged to help them. "We had a small fleet of vehicles to dispose of and we advertised them. Then we thought we might as well advertise the drivers at the same time. We thought we would endeavour to help them out. They had been a good loyal workforce and we thought it was the least we could do."
He admits the exercise was only partially successful. No one took the vehicles and drivers together, but as an indirect result, six of the drivers found alternative employment. "That was partly to do with us making a lot of noises in the area that we were finishing our transport operation and that good drivers were going." Three of the drivers were snapped up by another local company which had won a new contract and needed extra staff. The advertisements were confined to newspapers in Lincolnshire. "Most drivers are not going to get up and move anywhere quickly," says Bryson. "A lot of them were not young; three or four were in their 50s and the majority were in their 40s."
The approach at Liverpoolbased Dual Carriage was different when it decided to pull out of haulage and hand over all the work to owner-drivers. The company is essentially a clearing house for container and tank haulage and has been transferring work increasingly to owner-drivers. When it axed the jobs of its last three drivers at Southampton in )(larch, it offered the drivers the chance of leasing back their vehicles and becoming owner-drivers in their own right.
The attractions to Dual Carriage are easily understood: fewer employment costs, and no vehicle maintenance and insurance bills. It has given the drivers an assurance that they will get priority— along with seven other owner drivers they form the core fleet working for the company—but it has the flexibility to stand them down if there is no work available.
Southampton manager Kevin Simpson says the drivers—age 46 to early 50s. —are free to pull out of the agreement if they are unhappy with it. "They have taken the vehicles on a year's lease with the option to buy after a year, but we told them they could pull out at any stage. It's not a binding contract."
The trucks are all painted in Dual Carriage colours, but the drivers are free to work for other customers at quiet times. According to Simpson, they are unlikely to need to exercise that option as Southampton is "always going to have three jobs a day". John McNaughton, management accountant at the company's head office, says it has no problem about the liveried trucks working for the drivers' other customers as they would still advertise Dual Carriage.
The drivers didn't like it at first when we suggested it," says Simpson. "It was easier for them to be employed, but it has proved OK. They were paid redundancy compensation as well. Leasing the trucks was just part of the deal. They weren't palmed off with cheap compensation." In the past, arrangements of this sort have fallen foul of the Inland Revenue which, anxious to minimise the loss of employers' National Insurance contributions and the positive cash flow of PAYE income tax payments, has ruled that employees may not be as self-employed as they think.
Rod Jenkins, the Road Haulage Association's industrial relations manager, says operators should check with the Revenue in each case to establish how drivers should be treated. "They don't accept that just because you call someone self-employed that they are." The grey areas apply particularly to the use of self-employed drivers working in the company's own vehicles, but where vehicles are leased or hired to former employees, he suspects some tax inspectors might get suspicious. "There also is the question of the individual's freedom to take ther work and contracts. If the driver works two days for one customer, two for another and one for a third, then he pretty obviously is self-employed. "But if he is driving that company's vehicle in that company's liver: and simply calling himself self-employed because the employer wants the facility to lay him off willy-nilly. then it's clear he wants to have his penny, his bun and to eat it and that Inland Revenue will not consider that he is self-employed."
Jenkins .says drivers' status hangs on how often and at what frequency a driver works for his or her former employer and on the driver's ability to determine the work that he or she does. tk is sceptical of whether someone working week-in, week-out for one customer, taking all instructions from that customer and using a vehicle leased back by the customer will necessarily be able to class the driver as self-employed. And, as with other tax-related matters, the onus is on the "employer" to ensure that tax and NI are paid.
The trouble with this is that most owner drivers live by working for only one regular customer which, in the nature of the haulage industry, must issue instructions on vehicles and loads are to be taken. IV drivers working on their own would stretched trying to meet the potent ii conflicting requirements of separau customers.
McNaughton is confident that Du Carriage's three former Southarnpte employees can be described legitinir self-employed. "My understanding i they are individual VAT-registered companies, with their own accounta responsible for paying their own ta.), He believes that the drivers' freed, work elsewhere also keeps them on side of the Revenue. "As far as we're concerned, there should be no problt
SECURITY
Owner Operators UK managing din McHugh cautions drivers about rusl owner-driving when redundancy is alternative. "People without busines knowledge should acquire it before I acquire a vehicle. We had a guy phol who was unemployed, wanted to sta own and had £4,000 in the bank.! sE last thing he wanted to do was leave relative security of unemployment tt owner-driver." And he adds: "If ther choice between redundancy and bee owner-driver, remember that the em will lose some of his costs and statut obligations, the need to make emplo contributions, his obligations to the vehicles—and he may not have to pi two months. Drivers should take act that and their own likely costs and e before plumping for self-employmer McHugh. "There's no glamour, just aggravation in owning a lorry."
0 by Alan Millar