Associate solicitor Laura Binnie, in our Employment law team, discusses the recent Employment Appeal Tribunal decision that Uber drivers are 'workers'.
Earlier this month the Employment Appeal Tribunal (‘EAT’) upheld the first instance employment tribunal’s landmark decision that Uber drivers are ‘workers’ as opposed to being self-employed, for the purposes of the Employment Rights Act 1996 (“ERA”), Working Time Regulations 1998 (“WTR”), and the National Wage Act 1998 (“NMWA”). On this basis, drivers are therefore entitled to statutory worker rights such as the national minimum wage, annual paid leave, and protections from whistleblowing and unlawful deduction of wages.
Uber’s appeal was largely based on challenging the tribunal’s supposed disregard of written contractual documentation between the drivers and Uber, and by extension, the basic principles of agency law. Uber also argued that the tribunal had erred in law in relying on regulatory requirements as evidence of worker status, and finally that it had failed to consider evidence relied on by Uber which purported to disprove a worker status, and instead maintained that the drivers were self-employed.
At the heart of appeal was Uber’s reliance on the characterisation of the relationship with its drivers in contractual documentation being one of agent and principal, instead of employer and worker. A particular emphasis was placed on this documentation, which purportedly evidenced and represented the true nature of their relationship, whereby drivers acknowledged that they acted as Uber’s agent in their provision of transportation services.
Disagreeing with Uber’s interpretation of the relationship with their drivers, the EAT followed the decision in Autoclenz Ltd v Belcher and Ors that the tribunal was entitled to disregard terms in the written agreements, and that the key question the tribunal should instead assess was ‘what is the true agreement between the parties?’.
On this basis, the EAT determined that the reality of the situation, and the true nature of the parties’ bargain, was that the drivers did not work in business on their own account in a contractual relationship with each passenger it transports, and were instead incorporated into the Uber business of providing transportation services.
The EAT made is clear that the tribunal, in its initial decision, had been correct to have regard to the scale of the Uber operation with its near 30,000 individual drivers in London alone. Doing so, the EAT reviewed the notion, argued by Uber, that these thousands of drivers were not workers, but instead operated as businesses on their own account. The EAT concluded that there was no opportunity for drivers to reasonably grow their ‘businesses’, particularly when they do not have the ability to negotiate fares with passengers, and had to accept work in accordance with Uber’s policies and terms.
The EAT also confirmed the tribunal’s determination, in respect of the amount of control Uber exhibited over drivers, that they were not truly independent contractors, determining that any driver who (1) has the Uber app switched on; (2) is within their authorised territory; and (3) is able and willing to accept fare assignments, is working for the purposes of the WTR and NMW.
This decision comes on the back of a string of recent cases involving individuals working in the ‘gig economy’ where the business purports and represents to its clients that the individual is part of that business, however remaining distant from any notion that there is an employer and employee, or worker, relationship, and instead promotes a relationship based on agency.
What is clear, however, is that written contractual documentation will not necessarily protect businesses from scrutiny as to whether the individuals enjoy worker status, and that tribunals have the ability, and are entitled, to assess the true nature of the parties’ agreement by looking at the reality of the situation. At this stage, it would be prudent for businesses within the gig economy to review their business models in anticipation of impending higher court decisions and to plan for possible litigation concerning back dated worker rights claims.
Following the decision, Uber on Friday requested permission to appeal directly to the Supreme Court (bypassing the Court of Appeal) and it is possible that it may be heard alongside a similar case gig economy case involving Pimlico Plumbers.
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This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.