Uber drivers are workers and they are working when they are in their territory, logged on, and ready to work

(1) Uber BV (2) Uber London Ltd (3) Uber Britannia Ltd v (1) Aslam (2) Farrar (3) Dawson and others

Why care?

The Court of Appeal has upheld the decision of the Employment Appeal Tribunal and the London Central employment tribunal that Uber drivers are workers, not self-employed contractors providing services through a contract directly with their passengers. However, the decision was not unanimous, and permission to appeal to the Supreme Court has been granted.

Workers are defined under the Employment Rights Act as individuals who have entered into or work under a contract of employment, or:

"any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual" (s230(b) of the Employment Rights Act 1996)

Workers are entitled to protection from unlawful deductions from wages, to the national minimum wage, and to paid holiday under the Working Time Regulations. They are also entitled to whistleblower protection. Unlike employees, they have no right to claim unfair dismissal or redundancy.

A tribunal will have to look at the reality of the arrangement between the parties, not just the contract between them, to understand the true nature of the relationship. In Autoclenz Ltd v Belcher and others (2011), the Supreme Court held that in looking at the reality, a tribunal may disregard the label put on the relationship in the documentation between the parties.

The Court of Appeal was also asked to consider what would count as working time if the individuals were workers. The drivers argued working time should include all time spent logged onto the app waiting for jobs, whereas Uber said the clock should start only when the driver had accepted a job.

The case

A number of drivers brought claims for unlawful deductions from wages (because they had not received the national minimum wage to which they believed as workers they were entitled) and for paid annual leave. One driver also brought a whistleblowing claim.

Uber BV (UBV) owns the Uber app, and grants licences to passengers and drivers to use it. The contracts state that the drivers are self-employed and Uber London Ltd (ULL) enters into contracts with passengers as the drivers' agent. The industry is tightly regulated and ULL holds the required private hire vehicle (PHV) operator licence. Drivers own (or hire) their own cars and are free to choose when they wish to work.

The tribunal found that Uber provided transportation services to its customers through a pool of workers who used the app. Those drivers were workers for ULL when they were in the territory in which they were authorised to drive, they were logged onto the Uber app, and they were ready and willing to accept bookings.

Uber lost its appeal to the EAT. An application to appeal directly to the Supreme Court was denied, and Uber appealed to the Court of Appeal.

Court of Appeal decision

Employment status

By a majority decision, the Court of Appeal dismissed the appeal.

The tribunal was correct to find that the claimants were workers under s230(b). In deciding whether someone is an employee or worker, the fact that they signed a document containing standard non-negotiable terms will be relevant but not conclusive where the parties are in an unequal bargaining position.

The majority held that the terms of the written documentation did not reflect the practical reality of the relationships, and could be disregarded in accordance with Autoclenz. Uber was a transportation business to which the drivers provided their labour and through which the business delivers services to its customers and earns its profits.

ULL has a high level of control over drivers in order to protect its position as a private hire vehicle operator in London. ULL is not referred to in the standard form agreement between UBV and the drivers, which the Court of Appeal described as "a high degree of fiction", since ULL could only in the majority's view be entitled to act in this way if it did have a contractual relationship with the drivers. The supposed invoice generated automatically and sent from the driver to the passenger was also a "fiction".

ULL was not the driver's client or customer, and there was a contractual relationship between the driver and ULL that once the driver had accepted the request, he or she would pick up the passenger from their notified location, and take them to their destination.

Throughout the case, Uber was at pains to demonstrate that the way in which it worked was not dissimilar from that of minicabs or black cabs. However, the majority found that was not a helpful comparison. There had been no evidence given of minicabs' contractual arrangements; black cabs advertise in their own right, can ply for hire, and contract directly with passengers.

ULL has to satisfy Transport for London (TfL) that it is a fit and proper person to hold a PHV operator licence. The majority found that this reinforced the tribunal's conclusion that the drivers were providing services to ULL, not the other way round.

The dissenting judge, Lord Justice Underhill, disagreed. He saw no inconsistency between the written terms and the working arrangements, which were not in his view unrealistic or artificial. It is common in that taxis and minicabs are booked through an intermediary and there was no essential difference between that common practice and Uber's way of working. He referred to Mingeley v Pennock (t/a Amber Cars) (2004) and Khan v Checkers Cars Ltd (2005) as cases in which a driver can provide services to passengers through direct contracts, even though that services in question are integral to the minicab company's business and on conditions largely dictated by the company. He pointed out that a mini cab company was subject to the same regulatory obligations as Uber and the focus should be on the arrangements themselves.

Working time

The majority also upheld the decision that the drivers were to be regarded as working during any period when they were within their territory, had the Uber app switched on and were ready and willing to accept trips.

Lord Justice Underhill disagreed again. Drivers who refuse jobs are liable to be logged off for a period of time if they reject, or accept but then cancel, too many trips. Unlike the other judges, he did not believe this implied a positive contractual obligation on drivers to perform a minimum number of trips, and that workers should only be treated as working from the moment that they accept a particular job.

What to take away

This is not the end of the road for the case: permission has already been granted for a final appeal to the Supreme Court. This is to be welcomed because the split decision demonstrates that there are important questions to be determined.

Lord Justice Underhill's dissenting judgment touches on what he terms the broader considerations at issue, which is especially timely as the decision was published in the same week as the government's own Good Work Plan. He explains that he thinks it necessary to spell out the different roles of the courts and of the Parliament in addressing an issue of public concern.

He acknowledges that the question of whether those who provide services through platforms such as Uber's should enjoy some or all of the rights and protections of worker status is "a very live one at present". His conclusion that in this case the drivers are not workers "does not depend on any rejection of that view", and is based simply on what he believes to be the correct construction of the current legislation. If there is inadequate protection, especially where one party has superior bargaining power over the other, "the right answer is to amend the legislation".