An employment tribunal has decided (in Afshar and others v Addison Lee Ltd) that drivers working for Addison Lee Ltd (Addison) were workers for the purposes of holiday pay, national minimum wage and deductions from wages claims.  Perhaps of more interest is that it further decided that the two-year backstop on deductions from wages claims (in section 23(4A) of the Employment Rights Act 1996 (ERA)) was ultra vires (unlawful) and so of no effect.

Afshar and others v Addison Lee Ltd ET/3306435/2020 (Afshar)

In September 2017, Mr Lange and others claimed that they were workers, and the employment tribunal agreed (the Lange decision). Addison appealed but the EAT dismissed that and the Court of Appeal refused an application for permission to allow an appeal.

Later, in 2020, Afshar and others brought claims against Addison stating they were workers and were owed wages.  Addison, who had refused to accept that they were workers and claimed that, even if they were workers prior to 2017, they couldn’t have been workers after that date because of changes Addison had brought in (following the earlier Lange decision) with their new business model (including new contractual terms introduced in 2021 which stated that drivers were free to refuse jobs).

The tribunal found that the claimants were workers the whole way through, finding that Addison’s contention that they had stopped imposing sanctions on drivers who refused bookings was untrue, and the contractual terms introduced in 2021 allowing drivers to refuse jobs did not reflect reality.  The tribunal concluded that those drivers for Addison who rented and used Addison’s branded vehicles were held to be workers whenever they logged into the Addison platform (known as Shamrock).  However, other drivers who used their own vehicles or vehicles leased from a third party (known as partner drivers), were engaged as workers only once they accepted a journey request via Shamrock until completion or termination of the journey request. The tribunal stated that the reason for the distinction was that partner drivers were permitted to offer their services on other platforms (for example Uber) at the same time as offering their services via Shamrock; but non-partner drivers who drove Addison’s branded vehicles were forbidden from accepting work on other platforms.

Why is the two-year backstop on wages ultra vires?

Section 23(4A) of the ERA restricts an employment tribunal from considering a complaint where it relates to a deduction of wages if the deduction was made more than two years beforehand (ending with the date of presentation of the complaint) – known as the “two-year backstop”.   

In Afshar, the tribunal held (in what is thought to be the first judicial decision on this question) that the two-year backstop on wages claims in section 23(4A) of the ERA was unlawful.  They decided this because they deemed the Deduction from Wages (Limitation) Regulations 2014 (DWLR), which had introduced section 23(4A) under powers set out in section 2(2) of the European Communities Act 1972 (ECA), were ultra vires (unlawful). 

The DWLR were introduced to limit the burden on businesses of backdated holiday pay claims but, to avoid breaching the EU principle of equivalence (which means that EU-derived rights can be no more difficult to enforce than equivalent domestic UK rights), the government had applied the DWLR to all wages claims, not just those related to EU-derived holiday pay.

In his judgment in Afshar, Judge Hyams said that the rights conferred by Part II of the ERA “are of such fundamental importance to employees and workers that an amendment which limited their effect…was one which Parliament cannot have envisaged..” where the limitation was imposed in order to ensure that it was not challenged on the basis that a right derived from EU law was more difficult to enforce than a similar UK right.  He said that in his view a change to a primary statutory right, i.e. one conferred by an Act of Parliament, such as those conferred in the relevant parts of the ERA, of the sort which the DWLR purported to make, could be made only by an act of Parliament.  It was not therefore within the scope of the government’s power to try and avoid a breach of the principle of equivalence by also imposing that time limit on primary domestic UK rights through the regulations.  He found that primary legislation would have been needed for a change, such as the two-year backstop to be effective.

It is important to not that the decision is a first-instance decision of the employment tribunal.  It is highly likely that this will be appealed or potentially addressed by government in future changes to employment laws.  We will keep you posted on any further developments.

Please contact Jessica Jones on jones@ortolan.com for more information.

Further information

To see the employment tribunal decision in full, look at:

Mr T Mushtaq and others v Addison Lee Ltd: 2207566/2021 and others - GOV.UK