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Employment status: Testing casual drivers

24th Jan 2017
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Zubair Ahmed of Chartergate Legal Services analyses a case where HMRC argued that lorry drivers, who were engaged separately for each delivery, should be taxed as employees.


In RS Dhillon and GP Dhillon Partnership v HMRC [TC05583], the first-tier tribunal (FTT) had to decide whether the drivers engaged by the Dhillon partnership were ‘employed earners’ and therefore employees engaged under a contract of service, or whether they were ‘self-employed earners’ engaged under a contract for services.

HMRC had issued assessments amounting to £246,048 for PAYE and NIC in respect of payments made to drivers engaged by the partnership for the tax years 2009/10 to 2012/13. 

The facts

The FTT found the following facts in relation to how the appellant engaged its drivers:

  • Dhillon had access to a pool of drivers, but there were no written contracts in place between the Dhillon and the drivers
  • Dhillon owned a fleet of five lorries
  • Dhillon would notify the drivers, usually the evening before by telephone, of a particular delivery job
  • If the driver accepted the delivery job, the driver would pick up one of Dhillon’s lorries from the customer’s site, load it with materials, drive it to the construction site, unload it, and finally return the lorry to the customer’s site
  • The driver would undertake his tasks without supervision from Dhillon
  • It is the customer that would liaise with the delivery driver as to where, how and when to load and unload the lorry
  • Delivery drivers were paid fixed amounts per day shift or night shift. All payments were based on the shifts performed in a given week recorded in the weekly sheet signed by the driver
  • There was no guarantee of work from the customer to Dhillon and therefore there was no guarantee of work from Dhillon to the drivers
  • The driver could refuse work or remove themselves from the pool of drivers at any time without notice if they no longer wanted to be contacted for work
  • Drivers could work for businesses other than Dhillon
  • The drivers were required to attend training courses which the drivers were responsible for paying for. Furthermore, less experienced drivers had to undergo induction training with the appellant for a period of two weeks which was unpaid
  • Dhillon did not generally provide protective equipment for the drivers although spare equipment was available
  • If the driver, by law, reached the limit of the number of hours he could drive without a break then the driver could procure the services of another driver to do the job. The terms and conditions under which the second driver was engaged and paid was the responsibility of the first driver

Employment law tests

The FTT applied the facts above to the various employment law tests developed by case law, and examined the following elements:


Although the nature of the work undertaken by the drivers was highly prescriptive indicating control, finer details regarding where and when were controlled by the customers not by Dhillon. Therefore, the FTT concluding that the test of ‘control’ was of limited assistance.

Mutuality of obligation (MOO)

The FTT found that there was a series of engagements between the drivers and Dhillon with the required MOO being present on a “per job” basis. However, the FTT also noted that the “relative ease with which this requirement is met means that it is not a strong indicator in either direction.” 


The drivers’ right of substitution appeared to be limited because the driver could only send a substitute if the driver was unable to make any further deliveries due to legal restrictions. The presence of a substitution clause, albeit a limited right of substitution, could still be indicative of a contract for services (i.e. self- employment) but was not in itself determinative of the driver’s status (whereas an unlimited and genuine right of substitution would be determinative). 

In business on own account

The FTT also looked at other provisions of the contract which the FTT considered to be consistent with a contract of service (i.e. employment). For example, there was a lack of evidence to suggest that the drivers were in business on their own account and, crucially, in the absence of any written terms and conditions the FTT held that the appellant was deprived of the “argument that a common intention of the parties should tip the balance in favour of self-employed status.” 

Big picture

Instead of using a checklist approach i.e. determining whether each test has been satisfied or not, the FTT took a step back and looked at the whole picture. It concluded that Dhillon was business savvy and chose to engage drivers on terms that were unwritten, uncomplicated and non-negotiable.

The FTT stated that “master and servant” was an apt description of the relationship between Dhillon and its drivers. Mr Dhillon, the managing partner of the partnership, was very much “the boss” in the relationship. Furthermore, there was an absence of evidence that the drivers were running their own businesses which lead the FTT to decide that the drivers were employees of Dhillon rather than self-employed contractors.


In our experience HMRC has had a long-standing bone of contention with the driving sector, and commonly refuse to accept the position that drivers can be anything other than employees unless they hold their own license and operate their own vehicle. This intransigent position is reflected in HMRC’s employment status manual at paragraph ESM4210 which states:

“Drivers who only provide their labour, driving vehicles owned, maintained, and insured by contractors, are likely to be employees.”

Interestingly, this simplistic and erroneous argument was not deployed by HMRC in this case. While it is disappointing for the taxpayer to have lost this particular appeal on its facts, the facts of cases will always differ. What is more important is that HMRC had to argue this appeal based on the usual and familiar case law tests of employment status – there are no special rules or considerations for drivers (despite their manuals stating otherwise).

The case also underlines how vital a properly drafted written contract for services is to any employment status dispute. You may be surprised on reading some of the facts of this case that the taxpayer lost; but if clear written terms and conditions had been in place reflecting the above position (and specifying the common intention of the parties for self-employment) it seems unlikely that HMRC would have brought the case at all.

Replies (2)

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By ireallyshouldknowthisbut
24th Jan 2017 15:54

Glad to see some backbone from HMRC.

Quite frankly trying to argue these types for workers are self employed would seem to be a fantasy. No amount of "T&C's" can change the fact that none of these drivers seem to be anything other than employees on the bad end of a one sided contract.

I hope HMRC tackle some bigger fish, such as Hermes and get the poor sods working on less than minimum wage some justice.

Thanks (8)
By davidlchapman
25th Jan 2017 16:36


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