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At the end of October 2016, an employment tribunal ruled that two Uber ‘test case’ drivers were not self-employed, independent contractors but workers (for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1988, and the Working Time Regulations 1998).
This was the first case about job status in this part of what’s often called the gig economy. This was swiftly followed by a CitySprint case in February 2017, you can read the details here – and in March 2017, an Excel cycle courier case. It was announced that the GMB are representing 23 current and former workers of Parcel Delivery firm X who also believe they’re not self-employed.
The decision means the drivers are entitled to the national living/minimum wage, sick pay (SSP), holiday pay, rest breaks, protection under whistle-blowing laws, and pension contributions (under pension auto-enrollment laws). As freelancers, they had no legal right to these benefits.
Uber had argued that its drivers, or ‘partners’ as it calls them, were self-employed independent operators, while GMB (the union representing them) argued they were in fact workers, because of the degree of control Uber has over them.
Once a passenger request is received, Uber London locates the driver closest to the passenger and informs them via their smartphone app of the request.
The driver has 10 seconds in which to accept the trip. If they don’t respond within that time, another driver is allocated. The driver is only told the passenger’s first name at this point.
If a driver accepts the job, they and the passenger are put into direct contact through the Uber App to communicate. Drivers are strongly discouraged from asking passengers for the destination before the pick-up.
At the end of the trip, the fare is calculated by Uber based on GPS data from the driver’s smartphone, taking into account time spent and distance covered. This is the recommended fare, although drivers can agree lower fares with passengers.
Uber pays its drivers weekly, based on the fares they’ve earned minus a ‘service fee’ for using the App, which is now 25% of the fare.
Uber’s position is that drivers are at liberty to accept tips from passengers, but the Tribunal were shown documents that “evidence their disapproval of drivers soliciting tips”.
If passengers complain that they’ve been overcharged (e.g. following an inefficient route), Uber considers the complaint and whether to compensate them. If there’s no proper grounds for holding the driver at fault, Uber bears the loss.
A worker is defined under the Employment Rights Act as (summarised) an individual who has entered into or works under:
where the individual undertakes to do or personally perform any work or services for another party to the contract.
Uber relied on the following to demonstrate their relationship with the drivers:
Uber also said in its defence that Uber drivers were never under any obligation to switch on the app, and if they did, they weren’t under any obligation to accept any driving assignments. Therefore, this was incompatible with the existence of any form of employment or contract.
The Tribunal accepted that there was no obligation to turn on the App but when the App was switched on “any driver who:
a) has the App switched on
b) is within the territory in which they are authorised to work, and
c) is able and willing to accept assignments
d) is, for so long as those conditions are satisfied, working for Uber under a ‘worker’ contract”.
Uber also suggested that they supplied the drivers with leads, which suggests the driver is put into contact with a possible passenger with whom they’ve the opportunity to negotiate and strike a bargain. But the Tribunal felt that the drivers don’t and can’t negotiate fares with passengers (except to reduce the fare set by Uber). They’re offered and accept trips strictly on Uber’s terms.
On the relationship between the drivers and the company, the Tribunal found that the drivers provide the skilled labour through which Uber delivers its services and earns its profits. Relevant factors included:
The Tribunal was ultimately critical of Uber’s terms and conditions using “fictions, twisted language and even brand new terminology”, which didn’t reflect the reality of the situation of how they actually employ their drivers (an example being a description that “Uber drivers are commission based…” , which Uber said was a typographical error).
The decision is by a first-tier tribunal and so not binding on other tribunals. However, it’ll have implications wider than just costs for the whole ‘gig’ economy, even though it was fact-specific to Uber’s business model.
After the verdict, the Regional General Manager of Uber in the UK said: “Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and their own boss. The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want.”
There will, of course, be an appeal by Uber, and a further Tribunal to calculate the backdated holiday and pay the drivers should receive.
Since the decision, apparently Uber has e-mailed its 40,000 UK drivers to claim the judgements would only affect the two drivers who brought the case. The GMB Union responded by saying it applied to all 40,000 drivers. This fight may go on for quite some time.
In November 2017, the Employment Appeal Tribunal confirmed that Uber drivers were workers and not self-employed contractors. Uber had appealed the tribunal decision saying that it was the “agent” for the drivers who themselves provided the transportation services. The EAT found that Uber weren’t simply an “agent”, the question to ask was that when the drivers were working, who were they working for? The EAT found that the original Tribunal were entitled to conclude that there was a contract between Uber and the drivers, where the drivers personally undertook work for Uber as part of its business of providing transport services to passengers. Drivers were integrated into it, they couldn’t grow their own business, had no ability to negotiate terms with passengers and had to accept work on Uber’s terms.
They also considered whether drivers were ‘workers’ when they were between jobs (it was obvious they were working when they had a passenger in the car) – when the app was switched on and they were in the territory in which they worked and were ready and willing to accept trips. Uber said that during these times the driver could equally be logged onto the app of a competitor taxi business. The EAT felt that in reality once the driver had the Uber app switched on the driver was obliged to accept at least 80% of trips in order to retain their account status; if they had worked for a competitor during this time they were unlikely to be available for Uber work.
It was immediately expected that Uber would appeal and they did so to the Court of Appeal, who decided, in December 2018, that the Employment Tribunal were correct and the drivers were workers. Uber was given permission to appeal to the Supreme Court and the Supreme Court heard the case in July 2020 – we await their verdict!
Maybe, as if they choose to maintain their current practices they will face higher costs. They could choose to absorb these costs, pass them on to customers or simply change their practices so that drivers are legitimately working as self-employed ‘free agents’ plying their trade. No matter what choices they make, Uber’s position as a dominant online taxi service in London and with 40,000 drivers in the UK remains throughout this debate.
It sets clear boundaries on what being self-employed means: Having the freedom to choose when and where you work, as well as having a say over who your clients are. These are the fundamentals of working for yourself. If an online platform is trying to control someone to the extent that they can’t choose those things, and have to work under the platform’s brand at all times, then that, the tribunal has decided, really isn’t self-employment.
If a company wants that level of control over its workers then it needs to be willing to take responsibility for them the way any other employer does.
Not everyone wants to be an employee, and not everyone wants to be self-employed. That’s fine, but being clear on which is which is vital to a fair business landscape where we can all make choices as workers and consumers. The gig economy is here to stay, but let’s hope this decision is the start of ensuring greater fairness and clarity comes along with it.
If you are an Employer and need ongoing professional help with any staff/freelance issues then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.