< Back to Need to Know - Issue 8 2016

Uber drivers held to be 'workers', not self-employed contractors

Wed 23 Nov 2016

In one of the most highly talked of employment cases in recent years, Uber's business model has suffered a major blow following the Employment Tribunal's judgment that held that two drivers were workers, not self-employed contractors, and therefore eligible for certain rights at work. 

The Claim

Modern technology, and on-demand services more generally, have seriously shaken up the way that business operate in today's economy, as well as disrupting more traditional patters of employment.  Uber's service model was relatively simple: drivers would sign up, passengers would download the app and book a cab, and Uber's platform would link the two together and deal with payment, disputes and the suchlike.  Therefore, the drivers were self-employed cabbies and all Uber was doing was acting as the middle-man between the cab and the customer.  The business was that of a tech company, not a minicab service.  Or so Uber argued. 

Two of Uber's London-based drivers, Mr Aslam and Mr Farrar, and in particular their union, GMB, who are understood to have supported the litigation, were not so easily convinced.  They argued that the reality of the situation was that they were employees, or at least workers, within the meaning of the Employment Rights Act 1996.  They argued that the true relationship between Uber and its drivers was akin to the boss / staff relationship and that Uber exercised a great degree of control over them.

The Judgment

The Tribunal agreed with the drivers.  In a long and exhaustive judgment, the Tribunal flatly rejected Uber's main contentions – that it was a technology company, not a transport company, and that the drivers were freelance contractors. 

In particular, the Tribunal highlighted a number of ways in which the drivers were clearly workers:

  • Uber claimed that it was simply facilitating bookings between customers and independent drivers, but the reality was that Uber set the terms of those bookings, including the price and route, so there was no scope for the driver to independently negotiate the terms;
  • Uber implemented a rating system that effectively operated as a performance management system for the drivers, and could remove drivers from the Uber platform altogether if their rating fell too low or failed to improve over time;
  • Penalties were imposed for drivers who did not accept trips or cancelled trips, even though the drivers had no influence over whether they wished to agree any booking;
  • Uber described itself in advertisements and submissions to Transport for London in terms that were consistent with Uber being a cab hire company, rather than a booking platform, including talking about "our" drivers and passengers, and "providing job opportunities". 

Conclusion

In places, the Tribunal's judgment was scathing.  It was clearly unimpressed with some of Uber's attempts to circumvent the law by resorting to "fictions" and "twisted language".  Whilst the case does not add much to our understanding of employment status, it serves as a salutary warning to employers that employment status is a matter of substance, not form.  However much the parties may, at the outset, wish to have a contractor relationship, and however far the contractual documents attempt to establish that, the reality of the relationship will be determinative.  If the parties have developed a relationship of service, rather than merely providing services, the individual is likely to be a worker. 

The implications of this case are likely to be significant.  We are seeing, across multiple sectors and industries, an increasing move to the "gig economy", with increasing numbers of individuals engaged on zero-hours or commission-only contracts.  These arguments will no doubt be thrashed out again in the Employment Appeal Tribunal, and potentially in the higher appeal courts.  It is also possible that we may see new legislation introduced to deal with the challenges associated with the gig economy, as there is now a parliamentary inquiry looking at the future of work and workers' rights.  

If you have any questions or would like more information please contact a member of the Employment Team.   

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