15 November 2017
Uber drivers are workers, not self-employed, the Employment Appeal Tribunal agreed in an unsurprising judgment on 10 November 2017. But, on 14 November, Deliveroo won a ruling by the CAC (an authority dealing with union recognition) that its riders are not workers. This was a surprise.
Following a series of recent reported UK cases in which workers won eight out of eight challenges, Uber failed in its attempt to overturn last year's employment tribunal decision which held drivers have worker status, and so are entitled to certain minimum employment rights, including the right to paid holiday, to receive at least the relevant national minimum wage, and where applicable, to be auto-enrolled into pension arrangements. Unlike employees, workers do not have the right not to be unfairly dismissed.
Control was a key issue, especially that there were obligations on drivers to accept trips offered by Uber – an 80% acceptance rate was expected - and that they should not cancel trips once confirmed. Uber disputes this, saying the judgment relies on other terms than were used in its case.
For all businesses using contractors, this ruling reinforces the importance of the genuinely self-employed being fully in control of how and when they perform their services, there being no penalties for failing to carry out any assignments offered and having no restrictions on being able to carry out services for any third parties.
Uber is the latest in a series of cases which place emphasis on the reality of a relationship rather than how it is presented by an "army of lawyers".
In its appeal, Uber argued that it merely acts as an agent on the driver’s behalf, just like many traditional minicab operators. Despite Uber clearly categorising the relationship as that of self-employment in relevant paperwork, it was considered correct to look behind the label used by the parties to the practical arrangements actually in place, which were more consistent with that of a worker relationship.
The key issues revolve around the control that Uber allegedly has of its drivers in order to ensure quality of service. Uber controls key information, in particular regarding the passengers’ destination, and can take what is effectively disciplinary action against its drivers if they cancel trips, take poor routes or who receive poor ratings from passengers. The fact that Uber decides on the fare charged is also relevant. The driver may agree a lower fare, but if he or she does so will still be expected to pay the same amount to Uber.
The Uber drivers were found to be incorporated into Uber’s business of providing transportation services, rather than working in business on their own account. For example, Uber and the drivers were found to have a shared understanding that Uber would indemnify drivers for unpaid fares – while such agency relationships may exist, they are few and far between and the tribunal was able to see this as something pointing away from such a relationship.
But in contrast, Deliveroo succeeded in showing self-employment because its 'roos' have a right to substitute others for the job they have already accepted, or are yet to accept. This finding has been argued to rely on new contract terms only recently introduced by… yes, whole "armies of lawyers" … And the IWGB union in that case has said it’s a rare success for a business which is trying to "game the system".
Many – us included – have said there's a market interest in certainty. Anticipating the possibility of re-draft after re-draft terms prolonging uncertainty, the Taylor Review recommended that a clear test for platform workers' status should be enshrined, focussed on control. It specifically said substitution rights should be de-prioritised and that those go more to whether someone in an employee than a worker. Below we comment on possible legislative responses but in light of these two cases the score now stands at 9-1 to workers. Whatever the score over the next few months, there are some enduring messages for other businesses.
A factor which undermined Uber's appeal was its statements that it was "creating jobs". That was seen as inconsistent with the idea that it was an agent of the drivers. As Uber has sought to establish a brand narrative based on ethical and sustainable business, that narrative sometimes seems to compete with its legal arguments. Similarly, it relied heavily in this appeal on comparisons with the traditional mini cab market, while its litigation to establish that it is a digital company rather than a taxi business in the European Court of Justice remains to be determined. The findings in this UK case will not help that European litigation.
UK courts continue to assert their willingness to determine the true facts, and look at the reality of the narratives presented to them. Notably, the judge seemed to struggle with the idea that there is really a two-sided market, when there appears to be a one-sided bargain.
In last year's employment tribunal decision, the employment judge concluded that
Many commentators have concerns about the growth of information economy businesses so that they crowd out competitors. Uber's attitude to size and scale was relevant to the findings against it: its current dominance and size in the London market made it less likely that the drivers could hold themselves out as working for themselves or others, and the finding that drivers should accept 80% of fare offers, while not indicating total control, indicated overall control.
Uber argued that Transport for London (TfL) rules required it to exercise control over how the drivers – for example, the requirement that drivers must provide the services personally, and that should therefore not influence the categorisation of its relationship with its drivers.
The EAT judge disagreed. Whatever the reasons for control, if it exists those can be a sign of a worker relationship. A tribunal is not obliged to disregard relevant facts simply because they are a regulatory requirement, although all the circumstances should be considered in context (which may include the regulatory background).
And, in any event, there were findings that there are indications of control which are not required by the regulator TfL. The interview and induction process Uber operates, for example, is not required by TfL. Uber is required to obtain and record passenger details, but the decision not to pass these details on to drivers is made for commercial and security reasons, not because of TfL's rules.
One of the controversial points for any gig economy business is whether people who are on "waiting time" or "standby" should be considered as working for an app, when they are available to accept jobs from other businesses.
It was found that Uber drivers should be considered to be engaged on “working time” (and therefore entitled to minimum wage, for example) whenever they have the Uber app switched on and were available and willing to accept rides. This appears to be the case even if a driver is also logged into one or more other apps through which they could equally accept an assignment at any given time.
This raises issues around whether it is correct that an individual could technically claim minimum wage from each gig economy platform they happen to log into at any one time (even when they are not actually carrying out any work on any or all of them). It was made clear that this would be highly fact- and context-specific, but that the scale of Uber’s business was a factor suggestive of this being the correct analysis in this instance. The same approach may not be taken for other platforms which perhaps do not have such a high market share, where users of the various platforms are more clearly advertising themselves as being available to work not just for one app, or where it is less likely that assignments on that app would be preferred over others which may be available.
This was held to be partly determined by whether a worker holds themselves out as available for other jobs. So, having established that drivers are workers, what exactly the value of their working time and minimum wage rights is will still depend on the facts of their individual situations.
It will be hard to monetise claims for the 40,000 or so Uber drivers across the UK as if it is a class action.
Uber has said that it will appeal. The drivers have nothing to lose; Uber's business model has everything to lose. If drivers are entitled to holiday pay, that alone could be a cost of over £13.5 million per annum. Many gig economy companies have put off making changes to the way they do business pending final determination of the issues. If the higher appeal courts agree, Uber and others like it will have to make some decisions about how they pass on costs in their business models. So there is all to play for.
At the EAT hearing, Uber had previously indicated that it may wish to leapfrog the Court of Appeal to go straight to the Supreme Court (the UK's highest court) to be heard together with the appeal in Pimlico Plumbers v Smith.
The EAT judge included a couple of intriguing nuggets relating to the recent attitude of the Supreme Court to employment-related litigation. She quoted the July 2017 judgment holding that employment tribunal fees were unlawful,
"recognising the vulnerability of employees to exploitation, discrimination, and other undesirable practices, and the social problems which can result, Parliament has long intervened in those relationships so as to confer statutory rights on employees, rather than leaving their rights to be determined by freedom of contract."
Of course, Uber may alternatively decide to pursue its appeal before the Court of Appeal as usual, which would give more time in which to build its narratives and see how the debate on the gig economy and its regulation develops. The government is yet to respond to the Taylor Review prepared earlier this year for the Prime Minister, which suggested changes to UK law.
The experience of these cases, together with recent evidence given to the UK parliamentary committees examining modern working practices in October and November, lead us to think that in the following areas there will be potential policy clarification. That clarification is unlikely to occur until after the appeals in Pimlico Plumbers and Uber (and if applicable, following a potential challenge to the Deliveroo CAC decision). So our best estimate is that after Spring 2018 there may be legislative change.
Among the areas to consider could be these: