Case update (1): Uber drivers are ‘workers’

What do we already know?

We updated you in our November 2017 Newsflash Uber drivers are ‘workers’ on the EAT’s decision that drivers who provide services to the online taxi firm, Uber, are ‘workers’, rather than self-employed.

What’s new?

We promised you further detail on this case so here it is…

Summary:  When Uber drivers have the Uber app switched on, does Uber have sufficient control over the drivers to mean that they are ‘workers’ and entitled to employment rights?

Yes, says the EAT in Uber BV and others v Aslam and others available here.

Background:  The law in the UK distinguishes between groups of staff and provides different rights for each group. Broadly these groups are 1) employees, who have the largest selection of legal rights 2) workers who have a more limited selection of rights and 3) the self-employed who have minimal legal rights owed to them (other than contractual rights agreed between themselves and each organisation to whom they provide their services).

For a self-employed, non-employee, to qualify for worker status there must be a contract between the individual and the ‘employer’ under which the individual undertakes to do work personally, and the ‘employer’ must not be a client or customer of a business operated by the individual.

Determining the status of the relationship between businesses and those they engage involves the Tribunal looking beyond the terms and conditions in place between the parties to the reality of the relationship. The Tribunal will look at a number of factors to determine the true status of the relationship, but what really matters is the Tribunal’s view of how much control the business exerts over the individual, and whether or not that tips the balance away from the individual truly having the autonomy of being self-employed.

Those who show they have ‘worker’ status can then access a broader range of employment rights such as the national minimum wage, 5.6 weeks’ paid annual leave each year, right to a pension scheme, a maximum 48 hour average working week and rest breaks and protection of the whistle blowing legislation.

Facts: Uber operates a platform connecting passengers to thousands of drivers through a smartphone application. The application allows passengers to request to be picked up from a certain location and they pay Uber for the journey, Uber in turn pays the drivers.

Uber engages its drivers as self-employed contractors.  Two of its drivers issued a Tribunal claim on the basis that Uber were acting unlawfully by refusing to recognise their status as workers.  They claimed that Uber was failing to provide them with the correct rights and protections, such as paid annual leave and the national minimum wage.

Uber’s key argument when defending this claim was to contend that it is the passengers who contract with the drivers and that Uber does not therefore control when and how the drivers work.  However, the drivers disagreed and instead contended that in practice they are workers undertaking personally to do work for Uber and under its control, without Uber being a client or customer of the drivers business.

Uber also had a carefully crafted contract in place between the parties setting them up as self-employed.  However, the Tribunal looked beyond this and at the reality of the relationship in practice. The Tribunal accepted the drivers’ interpretation of the position, finding them to be workers engaged by Uber to provide services to passengers.

In terms of the relationship between the drivers and Uber, the Tribunal identified a number of components in their relationship with Uber which they thought to be significant indicators that the drivers were ‘workers’, including that:

  • Uber interviews and recruits drivers;
  • it controls key information as to the passenger’s identity and destination which is not shared with the driver;
  • it requires drivers to accept trips (with consequences for those in breach);
  • it imposes conditions on drivers, instructing them on how to do their work;
  • it fixes the fares; and
  • it controls the drivers in the performance of their duties.

Uber appealed to the EAT.  The EAT upheld the Tribunal’s finding and held that Uber drivers are considered to be workers when:

  • the drivers had the app switched on;
  • they were within the territory in which they were authorised to work; and
  • they were able and willing to accept assignments.

The EAT found that the written contractual documents in place were inconsistent with the reality of the situation. The drivers were essentially incorporated into the Uber business of providing transportation services, and were subject to the company’s control. The obligations placed by Uber onto the drivers were found to indicate a worker relationship. In coming to this conclusion, the EAT paid particular attention to the level of control exerted by Uber over its drivers and the fact that if its drivers were truly independent, they would be able to refuse or cancel jobs as they wished.  Instead Uber included requirements such as accepting a minimum of 80% of trip requests, as well as facing penalties should they fail to accept requests or cancel a trip.

Implications:  This is an important decision and employers should take note particularly as several other ‘gig economy’ cases before the courts this year, have found the so-called self-employed to be ‘workers’.   It will be interesting to see if case law relating to employment status in the gig economy continues to follow in this direction.

However, despite its importance, it is worth remembering that it is still fact-sensitive and Uber may well appeal.  Indeed, both the Tribunal and EAT were clear that Uber could have devised an alternative business model in which the drivers were self-employed; this was simply not the case here.

This lack of clarity in status may be resolved by legislation and, indeed, the recent Taylor Review (see our July 2017 Newsletter Government reforms (1): Employment status – Taylor Review) suggested that we need a clearer definition of workers, and that all workers should be taxed as employees. It also backed the equalisation of national insurance for the employed and self-employed, noting that current differences create incentives for individuals and companies to use self-employment.