Written by Brabners LLP
Uber have lost their appeal to have the tribunal decision which classified two Uber drivers as workers overturned. The decision by the Employment Appeal Tribunal will make interesting reading to those who adopt a business model centered on the engagement of self-employed individuals and contractors.
Background – a quick recap
The distinction between workers and self-employed persons is an important one for businesses, especially those operating in the gig economy. As you may know, workers are provided with greater protection under our employment laws, including for example having the right to paid holiday and the national minimum wage. This means that a person being classified as a worker (and not self-employed) by the tribunal or courts can come at a cost to businesses engaging that person on the assumption that they are self-employed. The status case against Uber was first brought in an Employment Tribunal last year. The two drivers who brought claims based on them having worker status were held to be workers and not self-employed (as Uber had argued). This meant the drivers were entitled to the national minimum wage, paid leave under the Working Time Regulations 1998 etc. Uber had argued that they weren’t a provider of taxi services, but were involved only in providing a technology platform which put drivers in touch with passengers via their app. They argued that in this set-up, drivers were not workers but were self-employed and the arrangement was supported by their contractual documentation. The Employment Tribunal disagreed and confirmed that the actual reality of the arrangement between Uber and their drivers was not as outlined in their contractual documentation. Uber appealed the decision to the Employment Appeal Tribunal, which was heard on 27 and 28 September. The long-anticipated decision has now been provided – read on for more details!
The Employment Appeal Tribunal (EAT) upheld the Employment Tribunal’s decision to classify the drivers as workers and not as self-employed individuals. They made the following points in favour of this:
- The key question that had to be asked was “when the drivers are working, who are they working for?” Uber had argued that it acted as an agent and the contract was between the driver and the passenger and that this was common in the private hire industry. In response, the EAT accepted that there could be a situation whereby an individual driver within the taxi hire industry could be operating as a separate and independent business, but that this was not the case here. The drivers were considered to be integrated into Uber’s business and marketed as such;
- The Employment Tribunal was entitled, and correct, to seek to look beyond any contractual documentation between Uber and the drivers to gain an understanding of the true reality of the situation and the obligations that the drivers were under. This requires exploring beyond the labels used by the parties in such documentation, and looking at the actual facts of the matter;
- The EAT also responded to Uber’s argument that the drivers had a choice to refuse work or to cancel booked trips and could even work for other companies and were, therefore, more akin to self-employed persons. Although the EAT confirmed that this argument was compelling, the fact that once the drivers were signed into the app they were expected to accept a high percentage (80%) of trip requests demonstrated that they were available and under the control of Uber from this time;
- Other factors that were considered of relevance to the level of control Uber had over the drivers included:
- The scale of Uber’s operations, having around 30,000 drivers;
- Drivers could not grow their businesses and had no ability to negotiate terms with passengers; and
- Drivers were compelled to accept Uber’s terms of business.
Uber has the ability to appeal against the decision of the EAT and it has been reported that they plan to do so. It looks as though there is more to come on this, which only serves to highlight the uncertainty for businesses and individuals working in the sector. With many businesses operating on the basis of engaging large numbers of self-employed individuals, cases on worker status being upheld are likely to be a key concern. It is clear from the cases we have seen that each case is very fact sensitive and that both the contractual documentation and factual matrix will be considered. It is also important to ensure that contractual documents between the parties match the reality of the arrangements so that due weight will be given to them by the courts. We are likely to see further developments on the issue of employment statuses in the near future, both in terms of case law and legislation being changed. Watch this space!
Disclaimer: This bulletin is for general guidance purposes only and should not be used for any other purpose. This article is written by Brabners and reproduced with their permission. Brabners is a Limited Liability Partnership.