Traffic Commissioners to scrutinize agency driver arrangements

12 January 2024

Senior Traffic Commissioner, Richard Turfitt, has warned operators that it would be a mistake to assume that Traffic Commissioners will not scrutinize agency agreements or arrangements. Where the use of agency drivers is circumventing the various rules that govern driver agencies or are being used as a front for self-employed drivers, the Senior Traffic Commissioner has made it clear that repute will be in question.

The decision marks a progression from previous cases where Traffic Commissioners and the appeal court have considered the use of self-employed drivers by commercial vehicle operators and concluded that the use of self-employed drivers is rarely legitimate. The appeal court have upheld the revocation of licences by Traffic Commissioners where operators have relied upon self-employed drivers. This latest decision demonstrates that operators need to be careful when engaging with drivers on an agency basis.

Whilst agency drivers have a place in the commercial vehicle sector, the Senior Traffic Commissioner made it clear that operators should not use agency drivers as long-term solutions, rather they are to provide temporary relief to deal with matters such as sudden or seasonal increases in work or a shortage of staff due to turnover or resulting from absences. Mr Turfitt referred to HMRC guidance which defines a temporary employee as “people that are contracted to a job for a limited period, and they are hired straight from the company or through a third-party agency that staffs for other companies.”

Further, guidance issued on the gov.uk website states that an agency worker is a person that has a contract with an agency but work temporarily for a hirer; “you’re not an agency worker if you use an agency to find permanent or fixed-term employment.” The guidance goes on to provide operators with various points which confirm that someone should be an employee.

Operators may ask why Traffic Commissioners are taking such an interest in agency arrangements and agency drivers. Mr Turfitt had cause to question whether the agency arrangement in the case before him was genuine on two grounds; (1) that all drivers were supplied through an agency and these were same drivers used by the operator on a permanent basis and (2) the same drivers had previous provided their services through their own individual limited companies. The operator had given an undertaking at a previous hearing to cease using self-employed drivers, however, the solution was for those drivers to provide their services through an agency. This gave rise to the Commissioner questioning whether this was a legitimate agency arrangement or simply a cover for the drivers to continue providing their services through their own limited companies. In these circumstances, the operator is gaining an unfair commercial advantage over operators who employ drivers, as the operator avoids the requirement to pay national insurance and pension contributions. Further, the arrangement may be facilitating drivers avoiding their tax liabilities by paying themselves in dividends rather than income tax.

Traffic Commissioners will therefore be scrutinizing agency arrangements to ascertain whether the arrangement is genuine or simply an attempt to gain an unfair competitive advantage over operators who are employing their drivers. This is the same approach that Traffic Commissioners take to operators who utilise the services of self-employed drivers.

Statistically agency drivers are engaged in far more incidents than employed drivers. There may be a number of reasons for this. A very clear reason is that agency drivers often haven’t been subjected to the same rigorous induction in the operator’s procedures and ongoing training. It is critical that operators who use the services of agency drivers make sure they are inducted and understand the companies systems before they go out on the road. Practically this may require an agency driver to be provided with training on a date in advance of their first day driving for the business. Operator’s should also assess the driver and make a judgment whether they have confidence with the agency driver and refuse to use them if they don’t meet the standard expected.

Another critical point is that operators need to exercise control over agency drivers in the same way they would over employed drivers. Whilst an operator may not be able to discipline agency drivers, letters can be sent to the driver and the agency warning them in relation to infringements and ultimately exercising the right to cease using that driver.

Mr Turfitt also reminded operator’s of their obligations under the Agency Worker Regulations 2010 whereby agency workers who have been working for 12 weeks or more attract many of the same rights as employed staff, including holidays and pay. Further, certain information must be provided to agency workers – Traffic Commissioners are likely to enquire and require evidence that this information has been provided.

Finally, Mr Turfitt took the opportunity to remind operators that it would be rare for commercial vehicle drivers to be genuinely self-employed. He referred to HMRC guidance issued in 2016 which confirms this and referred to IR35 not being a defence.

Backhouse Jones are providing a training course which deals with the use of drivers who provide their services through a limited company, are self-employed or through a driver agency. This course will draw upon the expertise of specialist employment and regulatory lawyers who will clarify the current position. You can book this course here. If you require further information, contact us here.