Employment Law Speed Read – 14/01/19

Facts

Uber operates a smartphone app through which customers are able to book a taxi. On receipt of a trip request, the app allocates the trip to an available driver. The driver has 10 seconds to accept the booking and if they fail to do so, the trip will be allocated to an alternative driver.

Although Uber drivers are not required to log on to the app, if a driver fails to accept bookings when logged on, warnings will be issued to the driver which may result in the driver’s account being blocked or suspended. Under the terms of agreement, Uber drivers are regarded as self-employed contractors; they are required to supply their own vehicle and they are responsible for all associated costs.

In 2015, a number of Uber drivers brought a claim against Uber for unlawful deductions from wages and a failure to provide paid annual leave. However, in order to successfully bring a claim for such rights, the drivers first had to establish that they were workers.

Employment Tribunal

The Employment Tribunal (ET) found against Uber and held that Uber drivers are workers and not self-employed contractors. The ET held that when Uber drivers are in the territory in which they are authorised to drive, they have logged on to the app and are ready and willing to accept fares, the drivers are workers of Uber London Limited.

The ET held that the contractual documentation between the parties did not correspond to the reality of their relationship. Accordingly, the ET was able to disregard the contractual terms which labelled Uber drivers as self-employed. Uber appealed to the Employment Appeal Tribunal (EAT).

Employment Appeal Tribunal

The EAT dismissed the appeal and affirmed the decision of the ET. The EAT held that the ET had been entitled to reject the contractual documentation between the parties and instead, examine the ‘true’ agreement between Uber London Limited and its drivers. The fact that Uber drivers were required to accept at least 80% of trip requests and would be penalised if they cancelled an assignment, was indicative of a worker relationship.

Further, the EAT held that when determining employment status, the starting point should be the statutory language rather than the label used by the parties. Uber appealed to the Court of Appeal.

Court of Appeal

The Court of Appeal dismissed the appeal by a 2-1 majority and upheld the finding that Uber drivers are workers. The majority of the Court acknowledged that although the contractual documentation between the parties is relevant, it is not conclusive. Subsequently, when determining an individual’s employment status, Tribunals should take a “realistic and worldly-wise” and “sensible and robust” approach.

The Court of Appeal held that there was a “high degree of fiction” in the agreements which Uber has with each of its drivers. Further, there was ‘ample’ evidence to support the finding of the ET. The fact that Uber interviews and recruits its drivers, has the ability to impose conditions on its drivers and subjects its drivers to a rating system, were all relevant considerations. Consequently, the ET was correct to determine that Uber drivers are workers and not self-employed contractors.

Comment

This case is one of a number of cases that has challenged the self-employed status of individuals working within the gig-economy. This case emphasises that when determining employment status, Courts and Tribunals will look beyond “the convoluted, complex and artificial contractual arrangements” and will examine the practical reality of the situation.

It is noted however, that Uber has already stated its intention of appealing the ruling to the Supreme Court.

If you have any questions on the above and how it will affect you, please do not hesitate to get in touch with a member of our employment team.