Inappropriate use of agency drivers
In a recent public inquiry, Traffic Commissioner for the East of England, Richard Turfitt, took action following attempts to circumvent the HM Revenue and Customs guidance on the employment of drivers.
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The operator, Enero Logistics Ltd, had previously been at public inquiry in June 2022 when it undertook to provide evidence to show financial standing and that permanent drivers would be employed and subject to PAYE and National Insurance contributions. Satisfactory financial evidence was eventually received, but it disclosed large payments to WOM Recruitment Ltd, with no obvious payment of wages.
An audit confirmed that drivers were ‘employed’ through WOM Recruitment Ltd (based in Newport, Wales) under a “Commercial Cooperation Agreement” dated 4 August 2022, i.e. shortly after the last public inquiry. The operator confirmed that the drivers, who had previously provided their services through their own limited companies, had insisted on being paid through that driver agency. The Director admitted that the arrangement meant that the operator did not have to pay the drivers when they were taking their breaks. He then took the opportunity of an adjournment to impress on drivers the need to comply with the undertaking and that the agency arrangement was not appropriate for permanent drivers.
In his decision, the Traffic Commissioner noted that some operators still wrongly believe that anti-avoidance legislation does not apply and that HMRC cannot pursue workers, agents, and the operator. Failure to comply with legal requirements can undermine the ability to hold an operator’s licence. The publicly available guidance on the GOV.UK website advises that a person is an agency worker if they have a contract with an agency but work temporarily for a hirer. Even workers doing occasional work for a specific business (where the worker has to agree to terms and conditions to obtain the work, where the business provides the materials, tools, or equipment) can be subject to the deduction of tax and National Insurance contributions from their wages. Legitimate agency arrangements are subject to specific legislation requiring the agency to supply the worker with information including the start date and how long the assignment is likely to be for. Agency arrangements will be scrutinised by Traffic Commissioners.
In this case the agency arrangement was found to be a sham. The Traffic Commissioner referred to the decision in 2019/54 Bridgestep Ltd & Tom Bridge where the Upper Tribunal noted that most operators make the right decision to employ their drivers, paying national insurance, pension contributions, holiday and sickness entitlement. Agency arrangements should not be abused. It is for both the employment agency and operator to ensure that a driver is given an adequate induction before starting work for a client. A key consideration for a Traffic Commissioner is whether the driver is familiar with the operation, its processes, or whether there is an additional risk to the business, other road users and to infrastructure.
The full decision can be found here.