The Employment Appeal Tribunal (EAT) has upheld an Employment Tribunal decision, whereby drivers engaged by Uber are workers rather than independent contractors.(1)
In 2016 various drivers – supported by the trade union GMB – brought claims against Uber for the national minimum wage, holiday pay and detrimental treatment for whistleblowing. In order to succeed, the drivers needed to be workers, rather than independent contractors as Uber argued. A preliminary hearing was held to consider the drivers' employment status and the Employment Tribunal ruled in favour of the claimants, finding that they were workers (for further details please see "Uber drivers win first round in employment status dispute"). Uber then appealed the decision to the EAT.
People using Uber's taxi service can hail cabs via a smartphone app which the drivers access. Uber locates the nearest driver and informs him or her of the request. Once the booking is confirmed, the driver and passenger can contact each other through the app. A route is plotted by the app and at the end of the trip the fare is calculated by Uber, based on GPS data from the driver's smartphone.
Uber's terms (with both passengers and drivers) state that it does not provide transportation services, but rather acts as an agent for third-party providers (ie, the drivers). Throughout the Employment Tribunal hearing, Uber held that it was providing "lead-generation" opportunities to self-employed drivers.
However, Uber had sought to control how its drivers provided the services in various ways. For example, it would deactivate a driver's access to the app if customer ratings fell below an acceptable level. It would also instruct drivers to log out of the app if they did not wish to carry passengers, in order to avoid creating an unsatisfactory user experience.
More generally, Uber discouraged drivers from cancelling trips after accepting them, contacting passengers after the trip and soliciting tips. The tribunal also heard evidence that Uber may settle passenger complaints and refund money without reference to the driver. Occasionally, Uber would pay the difference itself or deduct the money from the amount that it owed the driver.
Under UK law, there are three different capacities in which people can provide work:
- as an employee;
- as a worker; or
- as an independent contractor (commonly referred to as 'self-employed').
An individual's employment status determines his or her legal rights in the workplace – employees have more rights than workers, and workers have more rights than independent contractors. The category of 'worker' includes all employees; however, not all workers are employees.
A 'worker' is either an employee or someone who works under a contract through which he or she undertakes to perform work personally for someone who is not by virtue of that contract a client or customer. In other words, workers agree to work personally and are not running their own businesses.
Both parties accepted that the Uber drivers were not obliged to turn on the app or accept work; they could remain dormant if they wished. Therefore, there was no question as to whether the drivers were contractually obliged to provide driving services while the app was off. Uber contended that this meant that the drivers could not be workers, arguing that it was incompatible with any contract under which they provided services for Uber.
The tribunal disagreed, finding that any driver is a worker for so long as the following conditions are satisfied:
- The driver has the app switched on.
- The driver is within the territory in which authorised to work.
- The driver is able and willing to accept assignments.
In reaching this conclusion, the tribunal found that Uber was in the business of providing driving services, rather than generating leads for drivers to grow their own businesses. It did not agree that a contract existed between the driver and the passenger, taking into account that:
- the fee was set by, and paid to, Uber;
- the route was prescribed by Uber; and
- in practice, the driver and passenger did not agree the terms.
The tribunal also took account of the control that Uber exercised over its drivers and the fact that it operated what was effectively a performance-management process through a driver-ratings procedure.
Uber appealed to the EAT. Its principal argument was that its relationship with the drivers was one of agency; that is, the drivers were in business on their own account and Uber merely acted as an agent to agree the contractual terms between the drivers and the passengers.
Dismissing the appeal, the EAT held that the Employment Tribunal had been entitled to reject Uber's characterisation of its relationship with the drivers. While it was possible to have an agency relationship, the EAT found that this had not been the case based on these particular facts.
The Employment Tribunal found that the drivers were incorporated into the Uber business of providing transportation services and that they did so under arrangements and controls which pointed away from their working in business on their own account in a direct contractual relationship with the passenger every time that they accepted a trip. Having determined the true nature of the parties' relationship, the EAT concluded that the Employment Tribunal had permissibly rejected the label of 'agency' used in Uber's contractual documentation.
The EAT relied on various other factors in reaching this decision:
- The Employment Tribunal had been entitled to take into account the size of the operation – it was unlikely that 30,000 individual drivers sharing one point of contact would be operating as separate businesses. More importantly, the drivers could not grow their businesses because they could not negotiate terms with passengers and had to accept Uber's terms.
- Drivers were integrated into Uber's business, which was providing transportation services. They could not establish a business relationship with the passengers as they were unable to exchange contact details with them. Further, the drivers were subject to various controls by Uber and it would indemnify them for bad debts.
- The tribunal was obliged to consider regulatory requirements if they were relevant to determining the worker status. In any event, its findings were not limited to matters arising from regulation. It was not a regulatory requirement that Uber prevent its drivers from contacting passengers. Nor was Uber required to have a ratings system, provide the suggested route or deactivate drivers if they did not meet its requirements for accepting trips or improving their ratings.
- The EAT rejected Uber's contention that it was perverse for the Employment Tribunal to find that Uber exercised control over the drivers and that the drivers had no obligation to turn on the app. The tribunal found that while the drivers need not accept every trip, their account statuses would be lost if they failed to accept at least 80% of trips. (Uber disputed that the tribunal had made this finding of fact; however, the EAT rejected this. It pointed out that this part of the decision had not been specifically appealed and the claimants relied on it.)
The EAT had more difficulty with the issue of at what times precisely the drivers could be treated as Uber's workers. It accepted that when the drivers had accepted trips, they were workers. However, it was less certain that they remained workers in between accepting assignments. This issue is crucial because it is relevant to determining the drivers' working time and their entitlement to the national minimum wage.
The main difficulty arises because while the drivers are in the territory with the Uber app switched on and are "able and willing" to accept assignments, they may also have other apps open and be available for driving jobs for other operators. The EAT accepted that this was an issue, but found that it was not fatal to the drivers' case. If the drivers had similarly agreed with another operator to accept 80% of trip requests, they were unlikely to be at Uber's disposal as well – it would be a question of fact in each case.
The EAT's decision has been eagerly awaited by human resource and employment practitioners seeking guidance on how to apply the test for worker status properly in the context of gig economy businesses. However, it is clear from the EAT's judgment that it is highly fact-specific. Other cases concerning individuals working for gig economy businesses (including other taxi firms) may not be decided in the same way.
In any event, the EAT's judgment is unlikely to be the final stage in this litigation. Uber has already been reported to have stated its intention to appeal further. Normally, this would be to the Court of Appeal; however, the case may leapfrog that stage and go straight to the Supreme Court. In that case, it may be heard at the same time as the Pimlico Plumbers appeal on worker status, which has been listed in the Supreme Court for February 20 and 21 2018 (for further details please see "Pimlico Plumbers are workers not self-employed").
The government may also intervene with proposals to reform the law on worker status in light of the recommendations of the Taylor review of employment practices in the modern economy, which was published in July (for further details please see "The future of employment law: Taylor-ed to fit?"). However, the process would take a significant period and there would undoubtedly be further twists in the case law in the meantime – perhaps including more definitive analysis of the legal position on employment status from the Supreme Court.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
For further information on this topic please contact Sean Dempsey or Bethan Carney at Lewis Silkin by telephone (+44 20 7074 8000?) or email ([email protected] or [email protected]). The Lewis Silkin website can be accessed at www.lewissilkin.com.
Endnotes
(1) Uber BV v Aslam (UKEAT/0056/17).
