Uber drivers are workers, rules Court of Appeal
In a long-awaited judgment, the Court of Appeal has upheld the EAT’s ruling that Uber drivers are workers within the meaning of the Employment Rights Act 1996.
We reported on the Employment Tribunal’s decision in this case back in 2016.
In October 2016 the Employment Tribunal held that the contract between Uber and its drivers was pure fiction, bearing ‘no relation to the real dealings and relationships between the parties’. The tribunal looked at what was happening in practice as opposed to simply relying on the contract between the parties.
The decision was reaffirmed by the Employment Appeal Tribunal in November 2017.
Confirming that the drivers were “workers” meant that they would have the right, amongst other things, to be paid the national minimum wage and receive paid annual leave. Judge Eady highlighted the factual context for this decision – that drivers would need to have the Uber app switched on, they would need to be ready and willing to accept trips and would not be able to hold themselves out as available to any other operators. In such circumstances, it was correct to categorise them as workers.
Court of Appeal
The Court of Appeal has now ruled that Uber drivers should be treated as workers rather than self-employed.
The essential question as regards worker status was whether:
- (as the drivers argued) Uber contracts with the passengers to provide driving services, which the drivers perform for it; or
- (as Uber argued) it acts only as an intermediary, providing booking and payment services, and the drivers drive the passengers as independent contractors.
The written contractual terms say the latter. However, the Court of Appeal held that such terms do not reflect the practical reality of the relationships and can therefore be disregarded in accordance with the principle established in an earlier Supreme Court decision, Autoclenz Ltd v Belcher  UKSC 41.
In approving the reasoning of the Employment Tribunal, the Court of Appeal relied on a number of features of Uber’s working arrangements as being inconsistent with the driver having a direct contractual relationship with the passenger:
- Uber has the ‘sole and absolute’ discretion to accept or decline bookings;
- Uber controls key information relating to passengers (in particular their surname, contact details and intended destination) and excludes the driver from it;
- Uber requires drivers to accept trips and/or not to cancel trips and enforces this by logging off drivers who breach these requirements; and
- Uber subjects drivers, through the rating system, to what amounts to a performance management/disciplinary procedure.
Upon a consideration of the various factors and the judgment of the Employment Tribunal, the majority dismissed Uber’s appeal and held its drivers are workers.
Uber has been granted permission to appeal to the Supreme Court. This seems likely given that the Court of Appeal’s decision was not unanimous.
Where do we go from here?
2018 has seen claims from various individuals questioning their worker status and their corresponding employment rights.
In June 2018, the Supreme Court ruled that a plumber who brought a case against his former employer (Pimlico Plumbers) was a worker despite signing an agreement with the company which described himself as self-employed.
Likewise, an Employment Tribunal ruled Hermes couriers were workers, not independent contractors, and were therefore entitled to reclaim unlawful deductions from their wages.
The Court of Appeal’s ruling in respect of Uber drivers further strengthens the position of “would-be workers.” While flexible working arrangements can benefit both individuals and businesses, scenarios where the “paperwork” does not reflect the reality of the working relationship will continue to be a breeding ground for litigation. Given that workers are entitled to greater statutory rights and protections compared to self-employed individuals, it is crucial that the issues surrounding worker status are addressed at the outset. Failing to recognise workers’ rights could result in a position like Uber’s, a company withholding over £18,000 (consisting of wages and holiday pay) due to a refusal to adhere to the employment tribunal’s ruling regarding worker status.
At present, therefore, on n the one hand, we have unions campaigning for some of the most vulnerable in society who do not have security in their jobs and who do not benefit from even the most basic of employment rights. On the other hand, however, a study carried out by Oxford University found that most of those it surveyed valued flexibility more than a fixed salary and hours.
Clearly, in some cases there is already a fair balance of power in the workplace. In many instances a casual working relationship may be most appropriate. However, there is a growing political desire to prevent exploitation within the gig economy and to require additional protections where the power balance is too heavily weighted in one party’s favour.
The Government has recently published its Good Work Plan which sets out their vision for the future of the UK labour market and is their response to the suggestions made by the Taylor Report. We have already reported on a number of the proposed changes including the Government’s commitment ‘to clarify employment status so that it reflects the reality of modern working relationships’ through a more user friendly online tool. The Government accepts that businesses should not be able to avoid their responsibilities by trying to misclassify or mislead their staff and that legislation would be brought forward to tackle this issue.
Perhaps now would be an opportune time for businesses to review their terms in agreements with individuals, agencies and/or other companies to avoid any liability for any future payments that may fall to be paid.
We can help with drafting contractual employment documentation and can be a sounding board for any concerns you may have regarding worker status.
This bulletin contains general overview information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.