Self-employed HGV drivers and your operator’s licence

The issue of self-employed drivers for HGV operators has been a hot topic for some time but has recently gained traction to the point that it is routinely included in Traffic Commissioner public inquiry case directions.

Currently, the only acceptable way operators can demonstrate compliance is to show that drivers are directly engaged as employees or workers. Temporary workers can also be supplied through a genuine driver agency serving multiple operators.

What is a self-employed driver?

There are two limbs to this question, in that both HMRC and the Office of the Traffic Commissioner have raised concerns about their use but for different reasons.

HMRC has stated that it is ‘very rare’ for a commercial vehicle driver to be genuinely self-employed unless they are an owner-driver with their own operator’s licence and vehicle. This applies whatever title or label may be given to the driver’s relationship with the employer. For HMRC, the primary issue with engaging ‘self-employed’ drivers, when their status is in reality that of a worker or employee, avoids the payment of, for example, pensions contributions, holiday and sickness entitlements and National Insurance. 

The issue also concerns Traffic Commissioners because such arrangements can be prejudicial to fair competition within the transport industry.

The Bridgestep case

This was one of the conclusions reached by the Upper Tribunal in the case of Bridgestep, where it had come to light during a public inquiry that most of the operator’s drivers had contracts that stated the operator did not “supervise, direct nor control” drivers. The Traffic Commissioner considered that here the ‘self-employed’ label was not correct and, in any event, self-employed status was inconsistent with an operator’s responsibilities as a licence holder. The Operator’s Licence was revoked.  

On appeal, the Upper Tribunal upheld that decision and found that unless they are an owner-driver, it is very rare for a lorry driver to be legally ‘self-employed’. Drivers generally personally work under the control of the operator, are not running any type of business, and are therefore not genuinely self-employed. In this not only was it anti-competitive but the company and the transport manager could not control the drivers and did not have continuous and effective management of the transport operation. 

What about LTD drivers?

Operators may also be aware of the use of drivers engaged via their own limited company. So for example, instead of paying Mr G Smith as an employee the operator will pay ‘G Smith Limited’. Does this matter? The public inquiry case Quick Road Transport Ltd demonstrates that this approach will not be tolerated by the Traffic Commissioners. In that case, most drivers were engaged through a limited company and the Traffic Commissioner determined that the operator had effectively sub-contracted to a number of these limited companies which meant that each of the “LTD drivers” should have held their own Operator’s Licence. In the absence of an Operator’s Licence, the “LTD drivers” use of the vehicles was unlawful, resulting in the revocation of the Operator’s Licence.

Agency drivers

As for agency drivers, this set-up can be used legitimately but it will still be scrutinised by the Traffic Commissioner and where agency arrangements are a sham and being used as a front for self-employed drivers, an operator and transport manager are in danger of losing  their good repute. In the public inquiry case of Enero Logistics Ltd the Traffic Commissioner considered that even where there is a legitimate agency arrangement, operators must meet their obligations under the Agency Worker Regulations 2010, ensure drivers receive an adequate induction, and exercise the same level of control and oversight as they would for directly employed drivers.

What should operators do to ensure compliance?

HMRC’s self-employed driver guidance and the Upper Tribunal’s decision in the Bridgestep case have now been incorporated in the Senior Traffic Commissioner’s Statutory Documents. As a result, it is widely accepted that genuine self-employed HGV drivers will be extremely rare unless they are owner-drivers.

The above cases show there is an ongoing and urgent need for operators to ensure the way in which they engage their drivers is legitimate and compliant with HMRC and the Senior Traffic Commissioner’s guidance.

Operators should ensure that drivers are engaged as:

• Employees
• Workers
• Temporary agency drivers supplied through a legitimate agency

Reviewing driver engagement arrangements now can help protect both Operator’s Licence compliance and good repute.

Unsure whether your driver arrangements are compliant? Speak to a member of our team for expert advice on protecting your Operator’s Licence and maintaining good repute. Email enquiries@backhouses.co.uk or call 01254 828 300.