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Employment status: Uber loses appeal in the EAT

The Employment Appeal Tribunal (EAT) has handed down its judgment in one of the most significant employment status cases and has held that Uber drivers in London are workers, not self-employed contractors, for the purpose of the Employment Rights Act 1996 (ERA), the Working Time Regulations 1998 (WTR) and the National Minimum Wage Act 1998 (NMWA).

Following our update on Friday 10 November below is a more detailed analysis of the case.

Background

Under Uber’s innovative business model, Uber provides taxi drivers with access to its ride-hailing app to enable them to connect with and provide driving services to passengers (riders). It was Uber’s case that, in doing so, it acts as an agent for its drivers.  The tripartite agreement between Uber BV, the drivers and their passengers clearly states that the contractual arrangement for transportation services is between the Uber drivers and their passengers not Uber.  When an Uber driver signs into the app they are considered to be able to accept bookings.  Although there is no obligation on the driver to accept work, if they continually fail to take bookings they can be penalised and even have the app suspended or blocked.

In this high profile case, Uber experienced a difficult time in the Employment Tribunal (ET) where they unsuccessfully argued that they were simply a technology platform enabling passengers to be put in touch with self-employed drivers, rather than a transport provider. Despite extensive evidence from Uber detailing complex contractual arrangements demonstrating a self-employed relationship, the ET found that this did not reflect the reality of the situation.  The ET found that the drivers were workers for the purpose of the ERA, NMWA and the WTRs.  Uber appealed to the EAT, challenging the ET’s specific findings that:

  1. the Claimants were “employed” as “workers” by Uber London Limited (ULL);
  2. their working time was to be calculated in accordance with regulation 2(1) WTR; and
  3. for the purposes of the NMWR, they were engaged in “unmeasured work”.

The EAT

The EAT rejected Uber’s appeal on each of these three counts and upheld the findings of the ET. The EAT agreed with the ET’s finding that Uber’s business was in fact providing taxi services and that drivers were engaged by ULL as workers to facilitate this arrangement. Drivers who are ready and willing to take bookings, within their authorised work territory and are signed into the Uber app are workers.  In addition this period of time counts as working time for the purpose of the WTRs and hours worked for the purpose of the NMWA.

The reality of the relationship

Following the principles established by the Supreme Court in Autoclenz v Belcher the EAT looked behind the contract and found that the reality of the situation was that the drivers were incorporated into the Uber business of providing transportation services. The ET was entitled to reject the label of agency used in the written contractual documentation. The EAT emphasised the importance of considering the facts of the case against the statutory language rather than focusing on the written agreements and labels used by Uber.

When the drivers are working, who are they working for?

In reaching its conclusions the EAT outlined the key issue: when the drivers are working, who are they working for?  Although the EAT recognised agency situations do arise whereby agents will facilitate contracts between drivers and passengers, it did not find this to be the case with Uber based on the facts.  The EAT focused on the ET’s findings of fact on the level of control Uber have over the drivers and the sheer scale of the operation.  Although there is some room for movement, the ET found Uber have a large degree of control over the fare and the route taken.  In addition drivers are rated by passengers and can be subject to a form of discipline through the “Driver Offence Process”.  Uber’s appeal argument that the ET had erred by taking into account regulatory requirements as indicative of an employment relationship was also rejected.   Factors arising out of a regulatory requirement should not be disregarded simply because of their origin, rather, they should be viewed in context and considered as part of the factual matrix.  The example was given that personal service is a regulatory requirement but is also a relevant factor for worker status.  Overall the level of integration between the drivers and Uber was such that it did not indicate the drivers were in business on their own account.

Working time: problematic

The EAT accepted that the issue of working time was particularly troublesome. Uber certainly put their best case forward on appeal, arguing that drivers, even though signed into the app were under no obligation to accept work, could cancel trips already accepted and could work for others.  Uber argued that the drivers were not at their disposal during this period.  The ET did not find this to be the reality of the situation.  The EAT agreed, based on the ET’s findings of fact a driver could be a worker engaged on working time when in the territory, with the app switched on and ready and willing to accept trips.  A finding of fact was made that drivers should accept at least 80% of trip requests in order to retain account status and that this obligation was essential for Uber’s business model.

It has been reported that Uber are seeking permission to appeal.

Comment

Although the decision of the EAT was consistent with the direction of travel in recent cases, this latest development only serves to reinforce the pressing need for this complex area of law to be clarified. Following a succession of employment status cases, the Taylor Review into Modern Working Practices and a number of queries over labour supply post-Brexit, the need for certainty is of paramount importance to employers.

The Courts and Tribunals have been inundated with employment status cases in recent years and the heightened activity looks set to continue.  Addison Lee has sought leave to appeal an ET’s worker status finding and the Pimlico Plumbers’ case is due to be heard in the Supreme Court on 20 and 21 February 2018.  The CitySprint couriers case was due to be heard in the EAT on 29 November; however, it has been reported that CitySprint are not going ahead with the appeal, possibly following the Uber decision.    CitySprint has also reportedly updated their contracts better to reflect the relationship with their couriers.  Bucking the trend, the Central Arbitration Committee has found that Deliveroo riders (“Roomen ” and “Roowomen”) were self-employed contractors due to their freedom to substitute.  We will keep you updated.

There is no doubt that innovative, technology based businesses will play a key part in the future prosperity of the UK. The Taylor Review noted:

“Productivity is one of the central challenges for the UK and is key to improving living standards and retaining competitiveness. We know that the UK has a long standing weakness in this area, which presents a fundamental threat to our ability to grow and create jobs in the future. A key part of tackling this challenge will be the adoption of innovation and technologies aimed at boosting output.”

It has been recognised that innovation breeds accelerated economic growth; however this needs to be balanced against the impact on the labour market. Innovation creates gainful employment, flexibility and an excellent customer experience.  With Brexit around the corner, the role of technology in productivity cannot be overlooked.

We will provide further updates as we get them but if you have any questions in relation to this blog please Get In Touch

To find out more on employment status please visit our employment status – the barometer hub or join us at our Brexit Blueprint: Labour supply event

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further