Employment

Following on from our previous update, the Court of Appeal has published its eagerly anticipated judgment on the employment status of Uber drivers.

The Court of Appeal dismissed Uber’s appeal and upheld the decision of the Employment Appeal Tribunal that Uber should treat its drivers as workers.

This means the drivers will be entitled to increased employment law protection and rights including the national minimum wage and paid holiday. For background information on the long-running case to date, click here.

Why were the drivers given ‘worker’ status?

In its judgment, the Court of Appeal made reference to and agreed in the main with the expansive list of factors which the Employment Tribunal had identified in support of its decision that the drivers were workers.

These included, amongst others, that Uber:

• Interviews and recruits the drivers
• Sets the default route, from which the drivers depart at their peril
• Controls the performance of drivers and subjects them to disciplinary sanctions
• Requires drivers to accept trips and/or not to cancel trips and enforces penalties for non-compliance
• Fixes the fare to be paid by passengers, which is non-negotiable
• Reserves the power to amend the driver’s terms unilaterally

The fact that Uber is a Private Hire Vehicle operator with regulatory obligations (having to satisfy the authorities that it is a fit and proper person to run a business) was also considered to be significant in determining the drivers were workers.

Overall the Court of Appeal agreed with the Employment Tribunal’s analysis:

it is not real to regard Uber as working ‘for’ the drivers and that the only sensible interpretation is that the relationship is the other way round. Uber runs a transportation business. The drivers provide the skilled labour through which the organisation delivers its services and earns its profits.

When are drivers ‘working’?

The Court of Appeal found that a driver is ‘working’ when “he has the Uber App switched on, is in the territory in which he is licenced to use the App and is ready and willing to accept trips” and not only when they have picked up a passenger.

This includes times when drivers are waiting for the opportunity to accept a trip. This is because of the high level of acceptances required from drivers; and the penalty of being logged off if three consecutive requests are not accepted within 10 seconds. It was acknowledged that it is key to Uber’s business model that there are pools of drivers at Uber’s disposal, available at all times to accept trip requests.

The importance of accurate documentation

The Court of Appeal was critical of the wording of the contractual documentation which governed the drivers’ relationship with Uber, which they described as ‘artificial’. Emphasis was again placed on the importance of determining the ‘reality’ of the working relationship. A Court or Tribunal may therefore disregard certain contractual terms if they do not reflect the practical reality, particularly if they have been inserted to avoid statutory protections which would otherwise have been applicable.

Uber’s public statements

The Court of Appeal agreed with the Employment Tribunal that the language used in public statements made by Uber were a relevant consideration and could be indicative of the true nature of Uber’s relationship with its drivers. Particular statements which had been made were regarded as reinforcing the fact that drivers were working for Uber and were ‘wholly at odds with Uber’s case’.

This serves as an important reminder that not only is it important that contractual documentation is accurate, but also that PR and marketing activities are carefully considered in order to ensure that statements correctly reflect the commercial realities of employment relationships so as not to muddy the waters.

What’s next?

Uber has been granted permission to appeal to the Supreme Court, so it is unlikely that this will be the final word on the issue.

Underhill LJ gave a strong dissenting opinion in the Court of Appeal. One of the points he made was that it is for legislation rather than the courts to address the employment status and rights of individuals providing services via internet platforms. The government has committed in its Good Work Plan to improve the clarity of the employment status tests but no detail or timescale is available yet. It will be interesting to see what approach the Supreme Court takes, should Uber lodge an appeal.

In the meantime, although very fact specific, the latest Uber decision highlights a continued importance for all businesses, not just those operating a ‘gig economy’ model, to regularly review the employment status of their workforce to minimise the risk of wrongly classifying individuals and failing to provide the correct entitlements.

Employment status continues to be a complex area for employers and if you would like to discuss anything raised in this blog further, please get in touch with your usual Brodies contact. Workbox users can access more detailed information on employment status here.

Katie Spearman

Practice Development Lawyer at Brodies LLP
Katie is an Assistant Practice Development Lawyer within the employment team. Her role involves assisting with the development and maintenance of Brodies BResourceFull Workbox, our award-winning online HR and employment law resource. Katie also provides practical, up-to-date legal materials for clients as well as her colleagues in the employment team and regularly blogs on the latest topical employment law issues.
Katie Spearman