John Sprack Training

Employment Status - Uber Drivers are "Workers"

EAT confirms that Uber drivers are “workers”

Cases about employment status have dominated the employment law agenda over the recent past. It is natural that this should be so, because employment rights are wholly dependent upon the status of the individual who relies upon them.

As far as employment status cases are concerned, there is none which has attracted more attention than that brought by the Uber taxi drivers. Its high profile is partly due to the numbers involved. There are some 40,000 Uber drivers in the UK. 30,000 of those drivers are based in London, and about two million passengers are registered there, with access to the Uber app. The other factor which has focused attention on the case, of course, is its broader significance for those working in the gig economy, and in particular those linked to their work by the new technology which companies such as Uber rely on.

The recent decision on the appeal by Uber to the EAT (UKEAT/0056/17) is a sharp reminder that in determining employment status we should focus upon the reality of the situation rather than the wording of the contract.

To fill in the background, at first instance the Employment Tribunal (ET) held that the test claimants appearing on behalf of Uber drivers were workers, with the attendant rights which that status conveyed, including the right to the national minimum wage and to holiday pay. Its decision was firmly anchored on the definition of employment contained in the relevant statutes. The Employment Rights Act 1996 defines workers as follows:

s. 230(3) In this Act ‘worker’ ….means an individual who has entered into or works under….

  1.  a contract of employment, or
  2.  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….

The other relevant statutory provisions dealing with the national minimum wage, holiday pay etc have similar definitions. 

Having decided that the Uber drivers were ‘workers’ under limb (b) of the above definition, the ET went on to hold that their “working time” started as soon as they were in their allotted territory, with the app switched on, ready and willing to accept trips. Their working time ended as soon as any of those conditions ceased to apply. As far as the national minimum wage was concerned, it rejected Uber’s argument that the drivers were only working when actually carrying a passenger. It would therefore include time spent returning to the driver’s territory after completing a trip outside the area (but not travel time for getting to and from work).

Uber appealed to the Employment Appeal Tribunal against:

  •  the finding that the drivers were employed by Uber as “workers”
  •  the criteria for the calculation of working time made by the ET, with its implications for the payment of the national minimum wage.

The company’s primary case with regard to worker status was based upon the allegation that there was no contract between Uber and the drivers. Uber argued that the drivers were working in business on their own account. They contended that the company acted merely as agents for the drivers in their relationship with passengers. In support of this contention, they relied upon written contracts which characterised the relationship as one of agency. 

In a detailed judgment (48 pages, 127 paragraphs) HHJ Eady dismissed the appeal. When the Uber app was switched on, Uber drivers were workers for the purposes of their claims. Once it was switched on, they were obliged to be “able and willing to accept assignments”. They had to accept at least 80 per cent of trip requests. They were subject to a penalty if they cancelled a trip once accepted. 

As far as the agency argument was concerned, the judgment in the EAT relied heavily upon the Supreme Court case of Autoclenz v Belcher [2011] ICR 1157. HHJ Eady said that the ET had to determine what was the true agreement between the parties - Uber and its drivers. In doing so it had to have regard to the reality of the situation and the obligations on the parties. It had to be “realistic and worldly wise”. It should a adopt a “purposive” approach. In doing so it should take into account the relative bargaining strength of the parties in deciding whether the terms of any written agreement 

reflected the true intentions of the parties. Its must have regard to the statutory language, rather than the label used by the parties.

In her reliance upon Autoclenz, HHJ Eady distinguished the case of Secret Hotels 2 v Revenue and Customs Commissioners [2014] UKSC 16, upon which Uber relied. That was a case in the commercial environment and had nothing to do with the employment relationship  but concerned VAT liability for the sale of holiday accommodation. In such a case, the starting point would indeed be the written contractual documentation, and that would determine the matter unless it was shown to be a sham. In the Uber case, however, the ET was dealing with statutory provisions in the field of employment law, which were “enacted to provide protections to those often disadvantaged in any contractual bargain”. Its starting point was to determine the true nature of the bargain between the parties, having regard to all the circumstances. That was the approach in Autoclenz, which was correctly adopted by the ET.

As far as the question of timing was concerned, there might be gaps when the drivers did not have the app switched on, and were not working for Uber. However, that was not fatal to their status as workers when they did have it switched on. The ET was not wrong to hold that a driver would be a worker engaged on working time when within their territory, with the app switched on, and ready to accept trips. 

The stakes in this litigation are high for both sides. The recognition of worker status for the drivers has significant implications both for the 40,000 Uber drivers, and for workers and employers in the wider gig economy. For Uber, there is not just the bill for the national minimum wage and holiday pay, but the prospect of having to pay national insurance contributions, and possible VAT liability.

The word on the grapevine is that Uber will appeal against the EAT judgment. and that it may seek a “leapfrog” appeal to the Supreme Court. This could mean that it would be heard at the same time as the appeal from the Court of Appeal in Pimlico Plumbers v Smith, which also deals with ‘worker’ status.

John Sprack

16 November 2017

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