Uber is a software platform which connects passengers to drivers of cars available for private hire through a smartphone app. The passenger submits a request for a pick-up, which the Uber platform sends to drivers who are in the area and logged into the app. The passenger makes a payment electronically through their Uber account to Uber, which then (after deducting its fee) sends the payment to the driver. It is currently available in hundreds of cities world-wide, including in the United Kingdom, London, Manchester, Glasgow, Edinburgh and Belfast. The app has been phenomenally successful across the world because of its convenience, ease of use and because it disposes of the need to use cash to pay for trips.
Uber has always classified the drivers who work through its platform to be self-employed. Consequently, it did not consider them entitled to the minimum rights which accrue to workers or employees in the UK.
Last week, the Central London employment tribunal decided a test case brought against Uber by two Uber drivers with the support of the GMB union. The drivers claimed that Uber’s classification of its drivers as self-employed is wrong and that its drivers should be entitled to the basic rights enjoyed by workers in the UK.
The employment tribunal found in favour of the two Uber drivers. It decided that when drivers are logged into the app, and are able and willing to accept assignments from Uber within the area in which they work, they are in fact working for Uber as workers within the meaning of the UK’s employment legislation, and are not self-employed ‘arm’s-length’ contractors. This means that they qualify for worker’s rights, including among other things the right to national minimum or living wage, paid annual leave, rest breaks and a cap on maximum weekly working hours, whistleblowing protection, and auto-enrolment pension contributions.
Worker status is attributed to any person who works under a contract of employment or any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
An examination of the overall factual nature of the relationship is necessary to determine the individual’s status, in particular, whether there was personal service and whether the status of the employer was a customer of a business undertaking by the individual. The question of control which an organisation exercises over its staff is one of the key elements when considering the nature of the relationship. The employment tribunal made various findings about the nature of Uber’s relationship with its drivers, as set out below. The tribunal found that it was not the case that Uber was a client or customer of business undertakings run by the individual drivers, on the basis that the drivers are recruited and retained by Uber to operate its transportation business. In particular:
- Uber compelled drivers to agree with its description of itself and its analysis of the legal relationships, requiring drivers and passengers to agree as a matter of contract that it does not provide a transportation service. However, the tribunal reviewed evidence of phrasing used by Uber which reinforced the claimants’ case that it runs a transportation service. For example, it referred to booking ‘interviews’ for drivers and ‘providing job opportunities’ to people, drivers being ‘on-duty’ and ‘off-duty’, and referring to the drivers as ‘Uber drivers’ or ‘our drivers’ and to the cars as ‘Ubers’.
- To deny that Uber is a supplier of transportation services is ‘unreal’. The driving services are not provided by the individual drivers directly to the passengers; in fact, they are forbidden from doing so by Uber’s contractual terms. The marketing is for the benefit of Uber’s name and to sell its transportation services. Uber’s case that it is linking the ‘small businesses’ of individual drivers was ‘faintly ridiculous’. Uber does not supply drivers with ‘leads’, because drivers ‘do not and cannot negotiate with passengers…They are offered and accept trips strictly on Uber’s terms.’ Its case that there is a purported driver-passenger contract is ‘pure fiction which bears no relation to the real dealings and relationships between the parties.’
- With regard to the question of personal service, the tribunal found that Uber exercises a great degree of control over its drivers:
(i) It has ‘sole and absolute discretion’ to accept or decline bookings.
(ii) It interviews and recruits drivers.
(iii) It controls key information, such as the passenger’s name and destination.
(iv) It requires drivers to accept trips and/or not to cancel trips, enforcing this by logging off drivers who breach its requirements.
(v) It sets the default route, and creates a level of risk for the driver from departing from it.
(vi) It fixes the fare and higher sums cannot be agreed between the driver and passenger.
(vii) Drivers are subject to numerous conditions, and Uber instructs them how to do their work and, in numerous ways, controls them in the performance of their duties.
(viii) There is a rating system which amounts to a performance management procedure.
(ix) Historically, it had provided guaranteed earnings schemes for its drivers.
(x) It accepts the risk of loss and handles complaints.
(xi) It reserves the power unilaterally to amend the drivers’ terms and conditions.
The decision in the test case will bear on several other claims brought against Uber, but importantly has wider implications, not only for other Uber drivers but also for those who are engaged – in what is known as the ‘gig economy’ in the United Kingdom – by companies such as Deliveroo or Taskrabbit. Many individuals working in the gig economy do not fit comfortably into the traditional categories of being an employee or being self-employed. Rather, they sit in a continuum between these opposing poles, with varying degrees of flexibility, and subject to varying degrees of control. The issue now is how the rise of this new strain of worker and the risks of exploitation are best dealt with at law and by the tax authorities.
The increase in the numbers of temporary workers and workers whom businesses traditionally categorise as self-employed has prompted the government’s Business, Energy and Industrial Strategy Committee to call for submissions in a consultation on the “future world of work”, with the purpose of delving further into not only understanding how work is changing, but also agency work, self-employment and the status of employees in the gig economy. It will also examine working conditions and pay structures of non-traditional employees.
Separately, HM Revenue and Customs has just launched ‘The Employment Status and Intermediaries Team’ to investigate companies who opt out of giving workers employment protections by using agency staff or calling them self-employed. This takes place against the background of a number of complaints to HM Revenue and Customs by workers for Hermes, the delivery company, about their status.
It is almost certain that Uber will appeal the decision of the employment tribunal; equally it is almost certain that leave to appeal will be granted, given the fundamental nature of the concepts being argued over. The uncertainty in this area will persist for some time yet. Nonetheless, employers who operate in the gig economy, or who rely on the self-employed nature of their workforce, should note this important decision and may wish, at the very least, to re-assess the nature of their relationship with members of their workforce and the risk that they may actually be, at law, workers.
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