Navigating the issue of employment status in the age of apps

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Uber, the widely talked-about app that allows users to locate, request and pay for taxis through their smartphone, is increasingly subject to publicity in relation to the employment status of its drivers. The company is currently appealing a decision by the California Labor Commission that its drivers should be classed as employees and, in the UK, the GMB union has initiated legal proceedings on a similar issue. While much of the recent debate about employment status has focused on the casualisation of the workforce, for example through ‘zero-hours’ contracts, this debate concerns whether an occupation that has historically been treated fairly casually should be categorised more formally.

The legal issue

Uber asserts that its drivers are self-employed “partners”, but based on press reports the GMB union appears to argue they should be classed as workers. Employment status is a complex field, but in summary the ‘worker’ category is an intermediate status in UK law that encompasses not just employees, but also any individuals who personally perform work or services for another party – here, Uber – whose status is not that of a client or customer of any profession or business carried on by the individual.

Unlike the self-employed, workers are entitled to many of the rights afforded to employees, such as National Minimum Wage, limits on working time and holiday pay. Paying for drivers’ time off and ensuring their pay does not fall below the legal minimum, including between jobs, would likely hit either Uber’s bottom line or the wallets of its rapidly growing customer base.

Employment status and Uber

In general, taxi drivers who provide and maintain their own vehicles will be classed as self-employed contractors. Drivers for Uber also provide and maintain their own vehicles; however, the GMB claims the level of control exercised by the app over the drivers is indicative of worker status.

In addition to driving their own cars, Uber drivers are allowed to work for other companies, including other taxi services, and can work whenever and however much or little they want. Uber has claimed that its drivers value the flexibility that the arrangement provides. On the other hand, when they are working, Uber exercises control over their activities which is usually a factor in favour of worker status. Uber dictates how much passengers are charged, acts as a payment intermediary between passenger and driver, and dictates the routes the drivers should follow.

What next?

Any decision in relation to Uber will have ramifications for other websites and mobile apps that operate in the sharing economy and which connect potential customers with service providers. This includes not just taxi drivers but also, for example, handymen and cleaners. The complexity of Uber’s relationship with its drivers and the many factors that determine an individual’s employment status mean it is difficult to come to a view until the court has delivered its judgment.