Case law: Court of Appeal confirms Uber drivers are to be treated as workers
Businesses generating and passing work to third party individuals, taking a commission each time, but who treat those individuals as self-employed - should now consider whether they may be 'workers' under UK law, and entitled to basic employment law rights, following a Court of Appeal ruling.
This update was published in Legal Alert - December 2017
Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.
Uber is a company which provides a smartphone app enabling passengers to book trips with an available private hire car driver and to pay Uber electronically. Uber then pays the driver, after deducting its commission.
Uber treated the drivers as independent, self-employed contractors, not employees or 'workers'. It argued that it was acting as their agent when dealing with potential passengers, not as their employer. This meant they were not allowed employment law rights such as the national minimum/living wage, paid annual holidays, rest breaks, maximum weekly working hours and auto-enrolment pension contributions. However, two Uber drivers claimed they were workers' under UK law. Workers are entitled to these basic employment law rights, even though they are not full employees.
The legal test of whether an individual is a 'worker' is:
- whether they work under a contract of employment or any other contract (whether express or implied) under which they undertake to do or perform personally any work or services for another party, and
- the other party's status is not (by virtue of the contract) that of a client or customer of the individual's profession or business undertaking
Relevant factors include whether the individual is providing a personal service, whether the employer is a customer of the individual's business, and the degree of control the employer exercises over the individual.
Uber claimed it was a technology company, not a transportation business (in fact, this was acknowledged expressly in their contracts) so it argued it had no need of driver workers for its business. Uber argued that it simply provided an online platform to connect people wanting to travel from A to B with a driver of a vehicle prepared to take them on that trip. The drivers were not its employees or workers but its customers, who paid it to get access to the Uber app so that they could connect to potential fares. They pointed to the paperwork involved, which included not only the agreements between the various parties but documents such as invoices generated on behalf of the drivers for customers. They also argued that the drivers were contracting with the foreign Uber parent which owned the app, not the UK company which handled the local administration of the business.
The Employment Appeals Tribunal has upheld the ruling of the Employment Tribunal which found in favour of the driver.
However, the ET found that:
- The terminology in Uber's contracts – such as 'interviews', 'providing job opportunities', 'on- and off-duty', 'Uber drivers' and 'our drivers' - inferred that it was also operating a transportation business.
- The drivers' contracts with Uber prohibited them from providing driving services directly to customers. Uber must therefore have been providing driving services for its own benefit, which implied it must be providing transportation services.
- The paperwork involved contained 'fictions', ie it did not reflect what actually happened on the ground. For example, the invoices generated on behalf of drivers were 'fakes' that were never sent to customers.
- Uber's argument that it was simply providing the drivers with leads was not sustainable since the drivers had no leeway to negotiate the terms on which they provided their services to passengers. Both driver and passenger were bound by Uber's terms.
- Uber exercised significant control over its drivers, inconsistent with their being independent, self-employed contractors:
- It could accept (or refuse) bookings at its 'sole and absolute discretion'
- It recruited and interviewed drivers before allowing them onto the app
- Valuable marketing information, including passengers' names and destinations, belonged to Uber. Drivers were not allowed to give passengers their contact details
- Drivers had to accept 80% of jobs, and could not cancel them. Drivers who refused a fare three times were 'disciplined' by being logged off the app for ten minutes by Uber
- Uber set the route to be taken for each passenger
- Uber set the fares and prohibited driver and passenger from agreeing a different fare. Uber could make deductions from the sum paid to drivers if passengers claimed they had been overcharged
- Drivers had to follow Uber's processes and procedures which regulated how they did their jobs and controlled their behaviour in a number of ways
- Uber rated drivers in a manner akin to a performance management procedure
- Uber at one point guaranteed drivers' earnings, akin to a basic salary
- Uber was responsible for handling complaints
- Uber bore any loss made
- Uber had power to change drivers' terms and conditions unilaterally, similar to an employment contract
The Employment Tribunal (ET) therefore ruled that Uber was not a client or customer of business undertakings run by the individual drivers. Instead, the drivers were workers in Uber's transportation business during the periods when they were using the app and able and willing to accept fares from it within their local area. Uber was not acting as their agent to negotiate trips with potential passengers, but their employer. They were therefore entitled to the employment law rights they claimed.
The EAT agreed with the ET that when drivers had the Uber app switched on, they were workers entitled to certain important employment law protections, including the working time (rest breaks, paid holidays, etc) and national minimum wage regulations. Uber was not acting as their agent but their employer.
Uber is likely to appeal. If so, its appeal could be joined with the Pimlico Plumbers appeal, due to be heard in the Supreme Court in February 2018.
- Businesses who generate and provide work to individuals who they treat as self-employed should consider whether those individuals may be 'workers' under UK law, and entitled to basic employment law rights
Case ref: Uber BV, Uber London Limited and Uber Britannia v Mr Y Aslam and Ors UKEAT/0056/17/DA
Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.