Uber drivers are workers, confirms EAT
The EAT has confirmed that drivers for Uber are not ‘self-employed’ service providers but are engaged as workers by the company
In a much anticipated decision on employment rights in the so-called ‘gig economy’ the Employment Appeal Tribunal has today confirmed that drivers for transport firm Uber are not ‘self-employed’ service providers but are in fact engaged as workers by the company.
The EAT held that the first-instance employment tribunal had carefully and properly analysed the relationship between the company and its drivers and had been entitled to conclude that the reality of the situation was very different to the position set out in contracts and other documents.
By now, you will probably be familiar with the way Uber work. In short, the company operates a digital platform to provide transport services. Drivers sign up online and are connected with customers through a mobile phone app.
In the EAT, Uber maintained that their drivers are self-employed, primarily on the basis that the company does not control when and how the drivers work. The company argued that it is no different than a ‘traditional’ minicab company (albeit on a larger scale and using different technology) and acted as ‘agent’ for the drivers and not as an employer.
According to the company, their guidelines for drivers as to how work should be done are ‘recommendations’ and not obligations. It further argued that there is no obligation whatsoever on drivers to perform work. They were not obliged to switch on the app, or to accept driving jobs once the app is switched on. Another key argument in Uber’s armoury was the fact that the drivers bear the financial risk of the transaction, Uber can choose to absorb the loss if a customer refuses to pay, but is not obliged to do so.
However, the EAT rejected these submissions and upheld the decision of the employment tribunal that the drivers are engaged as workers by the company. It held that the employment tribunal had been entitled to reject Uber’s categorisation of their drivers as self-employed. The reality of the situation was that the drivers were not ‘in business on their own account’ but were incorporated into Uber’s business model. In reality, the drivers were subject to significant control by the business.
The EAT are very clear that, when the driver is actually driving, they are a worker and that is their working time. It was less certain that the drivers were workers when the app was on and they were waiting for a job to be allocated (as they could in theory be working for multiple companies during this time). However, the EAT accepted that the tribunal was entitled to decide that the drivers were also working during this period particularly because there was an obligation on drivers to accept 80% of the jobs offered whilst the app is on. The decision suggests that, whether an individual is a worker during these interim periods will depend on the particular facts of the case and the operating model used by each organisation.
What does this mean for me?
The question of whether an individual is self-employed or is a worker is crucial, as the latter are entitled to certain employment-related benefits such as paid annual leave, rest breaks, the national minimum/living wage, to be auto-enrolled into a qualifying pension scheme, and not to be detrimentally treated for whistleblowing.
This Judgment is very clear in emphasising that what you say in your documents will not decide the status of the individuals. A tribunal’s starting point must be the reality of the working arrangements. If you are at all concerned about the status of those you engage you must take detailed advice on the reality of the entire relationship in detail. Exactly what you do, the rules and requirements you impose, and the arrangements you have in place, will determine the status of your workers/contractors. It is of course still helpful to make sure that your contracts and supporting documents are clear and well-drafted to protect your position. However to ensure your contractors are engaged on the basis you intend, you may also need to make some real ‘on the ground’ changes.
Is the way you engage and pay your staff aligned with the way they work day to day? If not, you may be at risk of claims and face extensive hidden costs.
Bear in mind that any ad-hoc staff you engage may well be workers (or employees) during any periods in which they are actually performing work for you. This decision arguably makes such a finding more likely, even where they are not otherwise workers or employees under a longer term umbrella contract.
This case is important and interesting in the context of the ongoing debate about the gig-economy and whether the current legislative framework is flexible enough to accommodate new and emerging business models and ways of working. The recent Taylor Review closely scrutinised this area and made far-reaching recommendations for change. However this Judgment is another in a series of recent cases which suggest that the existing law is still enforceable in this context and is able to provide worker rights even when novel gig-economy tools are used.
The next key gig economy case is likely to be Pimlico Plumbers v Smith which is due to be heard in the Supreme Court in February. Today’s Judgment is also likely to be appealed further. However, in our view, this EAT decision is so thorough and clear that it may be difficult to mount a credible challenge. It remains to be seen whether today’s decision is the end of the road for this particular claim.
If you have any questions about the way you engage your contractors and workers, please speak to your usual Weightmans advisor in the Employment, Pensions and Immigration Team or Phil Allen (firstname.lastname@example.org).