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Uber’s worker status appeal rejected

10 November 2017

The Employment Appeal Tribunal (“EAT”) has upheld the decision of an Employment Tribunal (“ET”) that drivers engaged by Uber are “workers” rather than independent contractors.

Over a year ago, various drivers – supported by the trade union GMB – brought claims against Uber for the national minimum wage, holiday pay and detrimental treatment for whistleblowing. In order to succeed, the drivers would have to be “workers”, rather than independent contractors (as Uber argued). A preliminary hearing was held to consider the employment status of the drivers. The ET ruled in favour of the claimants, finding that they were “workers”, and Uber then appealed this decision to the EAT.

The background

People using Uber’s taxi service hail cabs via a smartphone app, which the drivers access. Uber locates the nearest driver and informs them of the request. Once the booking is confirmed, driver and passenger can contact one another through the app. A route is plotted by the app and at the end of the trip the fare is calculated by Uber, based on GPS data from the driver’s smartphone.

Uber’s terms (with both passengers and drivers) state that it does not provide transportation services but is acting as agent for third-party providers (i.e. the drivers). Uber’s position throughout the ET hearing was that it was providing “lead-generation” opportunities to self-employed drivers.

Uber did, however, seek to control how the drivers provided the services in various ways. For instance, it would deactivate a driver’s access to the app if customer ratings fell below an acceptable level. It would also instruct drivers to log out of the app if they did not wish to carry passengers, to avoid creating an unsatisfactory user experience. 

More generally, Uber discouraged drivers from cancelling trips after acceptance and from contacting passengers after the trip and from soliciting tips. The ET also heard evidence that Uber might settle passenger complaints, and refund money, without reference to the driver. Sometimes, Uber would pay the difference itself, or it might deduct the money from money it owed the driver.

The ET’s decision

Under UK law, there are three different capacities in which people can provide work: as an “employee”, a “worker” or an “independent contractor” (commonly referred to as “self-employed”). Their employment status determines their legal rights in the workplace – employees have more rights than workers, and workers more than independent contractors. The category “worker” includes all employees but not all workers are employees.

A “worker” is either an employee or someone who works under a contract through which they undertake to perform work personally for someone who is not by virtue of that contract their client or customer. In other words, workers agree to work personally and are not running their own business.

Both sides accepted that drivers were never obliged to turn on the app or to accept work; they could be totally “dormant” if they wished. So there was no question of drivers being contractually obliged to provide driving services while the app was off. Uber contended that this meant that the drivers could not be workers, arguing that it was incompatible with any contract whatsoever under which the claimants undertook to provide services for Uber.

The ET disagreed, finding that any driver who (a) has the app switched on, (b) is within the territory in which authorised to work, and (c) is able and willing to accept assignments, is a “worker” for so long as those conditions are satisfied.

In reaching the conclusion that the drivers were workers, the ET considered that Uber was actually in the business of providing driving services, rather than generating leads for drivers to grow their own businesses. The ET did not agree that a contract existed between the driver and the passenger, taking into account that the fee was set by Uber and paid to Uber, the route prescribed by Uber and in practice the driver and passenger did not agree terms.

The ET also took account of the control Uber exercised over the drivers and the fact that it operated what was effectively a performance-management process through a driver ratings procedure.

Uber appealed to the EAT. Its principal argument was that its relationship with the drivers was one of agency: the drivers were in business on their own account and Uber merely acted as agent to agree contractual terms between drivers and passengers.

The EAT’s judgment

Dismissing the appeal, the EAT held that the ET had been entitled to reject Uber’s characterisation of the relationship between it and the drivers. While it was possible to have an agency relationship, the EAT did not consider that had been the case on these particular facts.

The ET had found that the drivers were in reality incorporated into the Uber business of providing transportation services and that they did so under arrangements and controls which pointed away from their working in business on their own account in a direct contractual relationship with the passenger each time they accepted a trip. Having so determined the true nature of the parties’ relationship, the EAT concluded that the ET had permissibly rejected the label of “agency” used in Uber’s contractual documentation.

The EAT relied on various other factors in reaching this decision:

  • The ET had been entitled to take into account the size of the operation – it was unlikely that 30,000 individual drivers sharing one point of contact would be operating as separate businesses. More importantly, drivers could not grow their “business” – they could not negotiate terms with passengers and they had to accept Uber’s terms.
  • Drivers were integrated into Uber’s business, which was providing transportation services - they could not establish a business relationship with the passengers, not being able to exchange contact details with them. Furthermore, the drivers were subject to various controls by Uber and Uber would indemnify them for bad debts. 
  • The ET was not obliged to disregard regulatory requirements, if they were relevant to determining worker status. In any event, the ET’s findings were not limited to matters arising from regulation. It was not a regulatory requirement that Uber prevent drivers from contacting passengers. Uber was not required to have a ratings system, to provide the suggested route, or to deactivate drivers if they did not meet its requirements for accepting trips or improving their ratings.
  • The EAT rejected Uber’s contention that it was perverse for the ET to find both that Uber exercised control over the drivers and that the drivers had no obligation to turn on the app. The ET had found that, while there was no requirement to accept every trip, the driver’s account status would be lost if he failed to accept at least 80% of trips. (Uber disputed that the ET had made this finding of fact, but the EAT rejected this. It pointed out that this part of the decision had not been specifically appealed and the claimants relied on it.)   

The EAT had more difficulty with the issue of at what times precisely the drivers could be treated as Uber’s “workers”. There was no difficulty in accepting that, when drivers had accepted trips, they were workers. But the EAT was less sure that they were also workers in between accepting assignments. This issue is crucially important because it is relevant to a determination of the drivers’ “working time” (and their entitlement to the national minimum wage).

The main difficulty arises because, while in the territory with the Uber app switched on and “able and willing” to accept assignments, drivers might also have other apps open and be available for driving jobs for other operators. The EAT accepted this was a tricky issue, but it was not prepared to find that it was fatal to the drivers’ case. If the drivers had similarly agreed with another operator to accept 80% of trip requests, they were unlikely to be also at Uber’s disposal – it would be a question of fact in each case.

Implications

The EAT’s decision in this case has been eagerly awaited by HR and employment practitioners seeking guidance on how the test for “worker” status properly applies in the context of “gig economy” businesses. It is clear from the EAT’s judgment, however, that it is highly fact-specific. Other cases concerning people working for gig economy businesses – and even in other taxi firms – will not necessarily be decided in the same way.

In any event, the EAT’s judgment is unlikely to be the final stage in this litigation. Uber has already been reported as stating an intention to pursue a further appeal. Normally, this would be to the Court of Appeal, but there has been speculation that the case might “leapfrog” that stage and go straight to the Supreme Court. In that case, it is at least possible that it might be heard at the same time as the Pimlico Plumbers appeal on worker status, which has been listed in the Supreme Court for 20 and 21 February 2018.

Another possibility is that the Government might intervene with proposals to reform the law on worker status in light of the recommendations of the Taylor review of employment practices in the modern economy, which was published in July. If this happens, however, the process would inevitably take a significant period of time and there would undoubtedly be further twists and turns in the case law in the meantime – hopefully including some more definitive analysis of the current legal position on employment status from the Supreme Court.

Uber BV and others v Aslam and others UKEAT/0056/17 – judgment available here

 

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