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The problem with monogamy
Page 36
Page 37
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Is an owner-driver who works for one company an employee or self employed? it used to be an issue for the taxman; now it's mixed up with the Working Time Directive. Pat Hagan reports.
Self-employment is all about being your own boss It means having the flexibility to work when you want, for whom you want and in your own way.
But what happens when an owner-driver's working relationship with clients doesn't quite fit this definition?
The ties between some owner-drivers and the companies they contract for have become so close that some industry experts believe it could be argued they are effectively employees of those firms.
If so, it would raise far-reaching questions about whether they should have full access to the same benefits as staff on the company pay roll and that includes everything from pensions schemes to paid sick pay.
It's an issue that has been put under the spotlight by the Working Time Directive which takes effect for most drivers next March. Under the terms of the Directive, owner-drivers are exempt from the average 48-hour working week until March 2009, by which time a decision will have been made on whether self-employed drivers will be covered.
However, the Directive states that if a driver works solely for one company he is deemed to be an employee and has to comply with the rules from next year.
Lots of bosses This means thal to be classed as self-employed, a driver must not only be able to demonstrate that he is able to take on work for more than one business but that he regularly does so.
For many owner-drivers, this is unlikely to be a problem. But in certain sectors of the industry, it's not unusual for self-employed operators to spend all their time hauling for one supplier. In some cases, this entails having their vehicle decked out in that company's livery and donning a company uniform.
This question of self-employment passing into employment is not new. A landmark case back in the mid-sixties involved a firm then called Ready Mix Concrete (RMC).
The company engaged an independent haulier to deliver concrete in the south-east of England. But when that contract was terminated RMC introduced a scheme under which owner-drivers took on the job, working to written contracts The owner-drivers entered into an agreement to purchase trucks, with the mixing equipment on the back remaining the company's property.
The drivers' contracts stated that they must wear a company uniform, carry out "all reasonable orders" from any senior manager at the company and arrange substitute drivers if they went on holiday.
But the drivers had to maintain the vehicle at their own expense and pay all running costs There were no set work hours and no fixed meal breaks and the company never told them how to drive their trucks or what routes to take. After confusion arose over the status of the drivers. the Minister of Social Security was asked to rule on whether one particular driver was self-employed or not The minister decided the driver was indeed an employee under a contract of service but his finding was overturned on appeal to the I-ugh Court.
This case law has largely determined the status of owner-drivers ever since.
"What tipped it in the company's favour was the fact that the driver had to find a replacement if he went away," says Bob Monks, general secretary of the United RoadTransport Union."The court found he was self-employed on that basis "But there are no set criteria which identify whether someone is an employee or an independent contractor. You have to look at the whole package.
"For example, can that driver contract for one firm on a Monday but turn down work next day to deliver for someone else?"
Some companies still operate schemes similar to the RMC one from the sixties Tarmac, for example, has a contract haulier scheme, where the company helps an owner-driver purchase a new truck, gives them regular work and promises them "prompt payment of earnings".
Uniformed and liveried
Around 1,800 owner-drivers arc now part of the 30-year-old scheme. Most wear a company uniform and drive a truck in the Tarmac livery. In return, the driver remains self-employed but has the promise of a regular income.
Pat Madderson, accounts manager for the contract haulier scheme, says drivers are free to work for other firms, even in a Tarmac truck, as long as Tarmac gets priority: "Because of the resources we put into the scheme we don't like them working for other people unless we get first shout on the vehicle. But they do work for others and there are times when we actually arrange for that to happen."
The company's group logistics manager, Viren Gandhi, says Tarmac has taken legal advice the WorkingTime Directive for ownerdrivers. It has been advised to plan ahead on the basis that most if not all of them will not fit the definition of self-employed.
But Gandhi claims that the Quarry Products Association, of which Tarmac is a member, has a verbal commitment from the Department for Trade and Industry that the status of ownerdrivers will not be affected by the Directive.
"We've got a clear statement that it has no relationship with any other aspect of their employment status," he explains. Tarmac expects this commitment to be included in the government's guidance notes on the Directive, which are due out later this month.But transport lawyer Jonathan Lawton, from Cheshire-based firm Hill Dickenson, says employers need to be aware that the Working Time Directive definition of self-employed muddies the waters.
Lots of implications
Lawton believes the implications for employers are considerable if an owner-driver is judged to be an employee for the purposes of the Directive. Individuals could then argue they should also be responsible for pensions, holiday, salary scales and other benefits.
"From an employers' point of view this is really a very serious situation," he warns. Lawton believes drivers will be expected to prove that they have been working for several employers as part of the policing of the Directive. It will not be enough to just claim they could if they wanted to.
"If they were unable to show they had worked for anyone else, they would be classed as an employee," he adds.
Owner-driver Phil Baker of Hastings-based AJ Baker and Son operates as an independent operator.
But he fears he may be classed as an employee under the Working Tune Directive because 95% of his work is for one customer, RDL Distribution in Bexhill.
However, he has no written contract and does not operate in the company's livery. "I am an independent subcontractor," he says"! just happen to be working for them more or less all of the time."
But Baker has no desire to seek 'employed' status, irrespective of what potential benefits it might bring..