The "gig economy" and the employment status of Uber drivers

The law

Any workforce can be split into two broad categories: workers and self-employed, independent contractors. Within the category of ‘worker’ you find a sub-category of traditional employees who have greater employment protections than other workers. It is useful to remember that all employees are workers, but not all workers are employees.

The employment status of an individual is important for a number of reasons. There are different employment law rights that are applicable to employees, workers, and those that are self-employed, as well as different tax rules and obligations.

The facts

Uber seeks to present itself as a technology platform facilitating the provision of taxi services through an online app, not as the provider of the taxi service itself. It says that it acts as agent for the drivers, and the agreements in place state that the contract for the taxi service is between the driver and the passenger. Drivers are not required to make any commitment to work. When a driver signs into the Uber app however, through which they can receive ‘appointments’ from Uber to pick up a passenger, this signals to Uber that they are coming 'on-duty'. Uber is then able to send them appointments for a booking, which the driver can accept or decline. Once a driver accepts the booking, Uber places the driver and passenger in direct contact through the app which, in Uber’s view, forms the contract between driver and passenger.

A number of Uber drivers brought claims that Uber treated its drivers unfairly and was in breach of employment related legislation, in particular that it failed to pay the National Minimum Wage (as drivers alleged that they did not receive pay for all working time) and provide paid leave.

A preliminary issue the Employment Appeal Tribunal (EAT) had to consider was whether the drivers were workers of Uber for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1998 (NMWA) and the Working Time Regulations 1998 (WTR), which would entitle them to certain rights as workers.

The judgment

The EAT decided that the drivers were workers of Uber and were therefore entitled to employment rights that Uber had previously considered not applicable, such as the right to be paid National Minimum Wage and the right to paid annual leave.

Assessing your own staff

As employers will be aware, there are no hard and fast rules for deciding whether a individual is a worker or self-employed. It is therefore necessary to look at all the circumstances of each particular situation.

The terms of the contract are a good starting point, but sometimes an individual will be considered to be a worker, even if their contract says they’re self-employed. It’s the reality of the relationship between the parties rather than the wording of the contract that counts.

There are three key requirements that must be present in the relationship for someone to be a worker. If any of these are not present in the relationship, then the individual will be self-employed. These are as follows:

• Personal service – for an individual to be regarded as a 'worker', they must generally be required to carry out services themselves. If they are able (both theoretically and in practice) to send someone else to do the work in their place, then they will generally be self-employed.

• Mutuality of obligation – there must be an obligation on the 'employer' to provide the individual with work and an obligation on the individual to carry it out. Even if there is no obligation to offer on-going work or to take work offered (as is often the case with zero hours contracts), the courts have taken the view that the requirement of mutuality of obligation will be satisfied for each assignment that is offered and accepted.

• Control –  the individual must be subject to some measure of control, so that they can, at some level, be told what to do, how to do it or when to do it. If there is no right to control at all, then the individual will be self-employed. In practice, the greater the level of control, the stronger the pointer that the individual is a worker.

In the case of the Uber drivers, the EAT reached the view that the drivers were workers at all times when they satisfy all of the following:

• They are in the territory in which they are authorised to drive (in this case this was London and some surrounding areas).
• They have turned on the app.
• They are ready and willing to accept fares.

The EAT also decided that the above periods also counted as working time under the WTR 1998. For the purposes of the NMWA 1998, the tribunal decided that the drivers are engaged in unmeasured work. The hours that count are, in essence, the same as the hours that count as working time for the purposes of the WTR 1998.

Our comments

The EAT's judgment will be of significant interest to organisations operating or contemplating introducing employment models that resembles Uber's model. The decision is obviously highly fact-sensitive however; clearly the more your particular model resembles Uber's model, the more you need to consider the potential implications of this case on your arrangements.

For further information

To find out more about the impact this decision could have on your business, or to discuss the employment status issues, please get in touch with your usual contact at Anthony Collins Solicitors or speak to Anna Dabek.