The Uber Saga Continues – “Worker” Status in the Gig Economy

by McDermott Will & Emery
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In Depth

The UK Employment Appeal Tribunal (EAT) has upheld the Employment Tribunal’s (ET’s) finding that Uber drivers are “workers”. It rejected Uber’s argument that Uber is simply a technology platform acting as an agent to connect self-employed Uber drivers with users of the ride-hailing app.
 
What Is the Issue?

The United Kingdom recognises three categories of employment status: employees, workers and self-employed contractors, each with varying levels of protection under employment law. Employees and workers are afforded greater protection than self-employed contractors, with employees having the full suite of UK employment rights. Workers are entitled to core rights such as statutory holidays, sick pay and breaks, and national minimum wage.

Uber contends that its app platform facilitates the provision of taxi services, and that Uber drivers are self-employed and, as such, not entitled to workers’ rights.

The Employment Tribunal Decision

The ET decided, in a judgment given in October 2016, that Uber drivers are workers who work personally and are not providing a professional service or operating a business undertaking for their clients/customers (see McDermott’s previous alert, “Uber Drivers Uber Happy”).

Uber’s Appeal

Uber appealed the ET’s decision on a number of grounds, including the following:

  • The drivers had never worked under a contract with Uber and so had no contractual obligation to perform services for Uber. This was not consistent with worker status, according to Uber.
  • Uber acted as an agent for drivers who were in business on their own accord. The only contract between the driver and Uber was for the agency services provided by the company. Uber said that this was an arrangement commonly used by mini-cab companies.
  • The ET had incorrectly found that the drivers were “working” when they were in the territory in which they worked, were logged on to the app, and were able and willing to accept passengers, even when they did not have a passenger. 
  • Uber was required, under licencing laws, to obtain some level of control over the drivers’ paperwork and to operate a complaints procedure. Uber argued that the ET had been wrong to take this low level of control into account as an indicator of worker status.
The Employment Appeal Tribunal Decision
 
In dismissing the appeal, the EAT found that:
  • The contractual documentation between Uber and the drivers had been carefully drafted in order to avoid the drivers having “worker” status. In particular, the EAT emphasised the importance of looking at the reality of the drivers’ working relationships with Uber rather than simply relying on the contractual documentation that may or may not be in place.
  • Once logged on to the app, the drivers were required to accept rides. The EAT commented that drivers were required to accept 80 per cent of fares offered to them. In this way, Uber exercised overall control over the drivers.
  • Uber discouraged drivers from canceling trips once accepted and imposed penalties for doing so. Uber expected drivers, once logged on to the app, to be “able and willing” to accept rides. Again, this pointed to control by Uber.
  • The reality of the situation was that the drivers were incorporated into the Uber business of providing transportation services. Uber was not simply a ride-hailing technology platform.
What Does This Mean for My Business?
 

Employers cannot presume that categorising staff as “self-employed” will limit their employment rights. The recent run of gig economy cases, in which individuals who are ostensibly self-employed have achieved findings that they are properly workers, serve as a reminder to review self-employed arrangements with a critical eye to determine if those relationships might be vulnerable to being re-categorised.

The reason Uber is fighting this case so hard is that getting the classification wrong is expensive not only going forward, but also to rectify past omissions, mainly not giving paid holiday. The ECJ’s decision in the case of King v The Sash Window Workshop Ltd and another is currently pending, but we already know that the Advocate General has decided that where an employer has not made a facility available for workers to be able to take their paid annual leave, any leave not taken carries over to the next leave year indefinitely, until the individual is permitted to take their accrued paid leave, or until termination, when they will be entitled to be paid in lieu of taking all of it. That’s expensive.

For now, we wait to see if Uber will appeal. It has been reported that Uber intends to appeal directly to the Supreme Court of the United Kingdom, but it is unclear on what basis.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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