Agency drivers

Can a commercial goods vehicle operator avoid being prosecuted for not having an operator licence because the driver is neither his employee nor agent? Anthony Ostrin and Lynne Townley report

Those of us who practice road transport enforcement law are involved frequently in cases where an individual is operating a goods vehicle commercially, but does not hold an operators' licence authorising him to do so.

Statutory provisions

Under s 2 of the Goods Vehicles (Licensing of Operators) Act 1995 (the Act), the use of a goods vehicle on a road for the carriage of goods for hire or reward or for, or in connection with, any trade or business carried on by him, save under a licence issued pursuant to the Act is prohibited. Section 58(2) of the Act provides, inter alia, that the user of the vehicle shall be deemed to be the person of whom the driver is the servant or agent. Considerable sanctions are in place for operators who act in contravention of the statute. For instance, as a result of recent legislation, vehicles being used without a valid operators' licence are liable to be impounded. The potential financial implications for the operator aside, any conviction under the Act so recorded can affect the good repute of the operator to the extent that it may be difficult or impossible for that operator to obtain an operators' licence in the future. Hence such prosecutions are often vigorously contested in the courts.

Use of agency workers

It is now common practice that vehicle operators obtain drivers through an employment agency. The agency in turn is the employer of the driver. While various arrangements exist between these parties, the most common practice is that the operator pays a commission to the agency which will cover the drivers' wages plus the agency's expenses. The question addressed in this article is whether an operator who does not hold a valid operator licence can avoid liability on the basis that the driver is not his employee and does not act as his agent.

Case law

The general guidance that emerges from the caselaw is that, subject to certain principles, each case falls to be examined on its own precise facts. In Interlink Express Parcels Ltd v Night Truckers Ltd (The Times, 22 March 2001), the Court of Appeal held that the test to be applied when attributing responsibility for the operation of vehicles for the purposes of s 58(2) of the Act was one of control. In this case, the court considered that the main purpose of the Act was to govern the responsibility of those who controlled the actual use of the vehicle, and the precise contractual position that might be in existence notwithstanding, drivers could be temporarily deemed to be employees of the operator when the operator had control of the particular activity being carried out. In Interlink, the court concluded that the extent of control over various activities of the drivers that was exercised by the claimant raised a strong inference that the claimant had the right to control the way in which the drivers operated its vehicles and, as a result, those drivers should be regarded as temporary deemed servants for the purposes of s 58(2). It should be noted that the absence of a statutory definition of the term 'servants' within the body of the Act allows the courts to give it a dynamic meaning and enables the law to keep pace with the changes in the nature of employment, including the increasing use of agency drivers.

This principle has now been reinforced in Muscat v Cable and Wireless plc [2006] EWCA Civ 220. In dismissing an appeal from the Employment Appeal Tribunal, the Court of Appeal held that the fact that a worker was paid by an employment agency and had an agreement with the employment agency to provide his services to the end-user did not preclude the existence of an implied contract of employment between the worker and the end-user. In delivering the judgment of the court, Smith LJ referred to guidance given by the Court of Appeal in Ducas v Brook Street Bureau [2004] ICR 1437 about the employment status of a person who worked under the control of an end-user, but was paid by the employment agency who had introduced him. The guidance concluded that an employment tribunal should examine all the evidence relating to the three parties (namely the worker, the agency, and the end-user), including any written agreements and oral statements, and also the conduct of the parties. In the light of that evidence, the employment tribunal should consider the possibility that the worker had an implied contract of employment with the end-user. Applying those principles, the court held that the essentials of a contract of employment were the obligation to provide work for remuneration and the obligation to perform it, coupled with control. It did not matter whether the arrangements for payment were made directly or indirectly. In this case, the court was also of the opinion that it was necessary to infer the existence of an employment contract in order to give business reality to the relationship and arrangements between the applicant and the defendants.

Conclusion

While these cases are civil cases and therefore not directly concerned with a prosecution for using a vehicle without an operator licence, it is submitted that the same principles must apply to a prosecution instigated pursuant to s 2 of the Act. Taking together the principles of Interlink and Muscat, it is submitted that a contract between a driver and an operator could be implied, notwithstanding that the driver is being paid by an employment agency or indeed possibly even if the driver is self-employed. It follows, therefore, that in such circumstances, a submission by an operator that he is not contravening the Act if he is not in possession of a valid operator's licence because the driver of his vehicle is not his employee is now likely to fail.