A group of Uber drivers recently made a claim to the employment tribunal to challenge their self-employed status. They argued that they are in fact workers.
The tribunal has agreed with the Uber drivers making this a landmark case. The impact of this decision has far reaching consequences as it has been widely considered a test case in the rising gig economy. The gig economy refers to the growth in work being contracted on a freelance basis for a short term, a gig.
The Uber business model relies heavily on drivers being self-employed, which means that drivers are not covered by key employment legislation such as the minimum wage and statutory annual leave.
Given that there are estimated to be in the region of 30,000 Uber drivers in London alone, the ruling has the potential to have a significant impact on the Uber business model.
Uber’s key arguments related to the nature of their relationship with Uber drivers and the nature of their business. Uber suggested that it acts as an agent by providing the technology used by the passengers and the drivers but is not in fact a transportation business. The self-employed drivers chose to use the Uber app in order to assist and grow their businesses.
Organisations making informed employment status decisions
The tribunal has looked at key areas when determining whether the drivers are workers or self-employed. Organisations should ensure that they are aware and understand these areas so they that are providing their employees with the right status.
- the written terms of the agreement between Uber and drivers do not correspond with the practical reality. It was not accepted that each of the 30,000 drivers within London were individual small businesses. The drivers have no opportunity to agree fares with passengers, and they are offered and accept trips strictly on Uber’s terms;
- the nature of legal agreements, such as Uber requiring drivers and passengers to agree by contract that it does not provide transportation services, merits a degree of skepticism;
- proof of spoken and written communications by Uber reinforce that the organisation runs a transportation business and therefore employs drivers. One communication refers to Uber drivers earning a commission;
- Uber’s claim that it is not a supplier of transportation services, simply an agent, defies common sense. The products offered by Uber are a variety of driving services. The claimants as individuals do not offer such products. The products are for Uber’s gain, in order to sell their transportation services;
- Uber claims that it acts as an agent and that Uber in fact works for the drivers. This cannot be the case. For example, the driver has no full details of the passenger, for security purposes, the driver is not aware of the destination prior to agreeing the pick-up and he is not permitted to agree the fee. This shows that this cannot possibly be the case, Uber controls the work. Agreements therefore bear no relation to the real dealings and relationships between the parties;
- It is accepted that, whilst the app is turned off, there is no contractual obligation. However, once the app is switched on, the driver is within the territory which they are authorised to work and is able and willing to accept assignments. The individual is working for Uber and a worker contract exists;
- The drivers do not market themselves. They are interviewed and recruited by Uber to work as integral components of its organisation; and
- Uber drivers are not permitted to pass work to a substitute if they are unable to drive themselves. They are not permitted to provide their app details to any other person.
The tribunal decision means that Uber drivers are entitled to worker rights such as the national minimum wage and to receive paid annual leave. This means that Uber drivers could receive pay-outs in respect of underpayments of wages and holiday pay.
Given the significant impact for Uber the matter is likely to be appealed to the Employment Appeal Tribunal.
Whilst the decision is not binding on other tribunals and courts, the ruling does pave the way for claims from individuals who work under similar agreements for other organisations.
Employer status is set to remain as a hot topic and so it is important that employment status is determined correctly at the start and reviewed regularly to ensure that what is agreed reflects the true nature of the professional relationship.