17 Nov 2017

In Uber BV and others v Aslam and others UKEAT/0056/17/DA, the Employment Appeal Tribunal dismissed Uber's appeal and upheld the employment tribunal's finding that Uber drivers were workers rather than self-employed contractors.

Background

Over the past few years, there have been a number of high-profile cases that have considered the employment status of drivers and couriers working for gig economy companies such as Uber, Citysprint and Deliveroo.

These companies have argued that the drivers and couriers, who carry out some of the core functions of their businesses, are self-employed contractors rather than workers or employees.

The status of worker is effectively a status in between employees (who enjoy the full range of employment rights) and contractors (who are self-employed). Workers receive a lesser degree of protection than employees under UK employment law but do receive some important entitlements, including holiday pay, the national minimum wage and sick pay.

The key principles that decide status are: 

  • Personal service: whether the person is required to provide the service personally
  • Mutuality: whether the employer is obliged to provide the person with work and, in turn, the person is obliged to undertake work that is provided
  • Control: whether the employer has the power to control the person by dictating how, when and where work is to be carried out.

If all three of the above factors are present, the individual will be an employee and will benefit from all of the relevant protections under UK employment law. Where personal service and mutuality are present, but there is not sufficient control over the person, they will have worker status. Where none of the above factors are present, the person will be a contractor in business on their own account and will be in a service-provider – client relationship, rather than an employer – employee/worker one. Consequently, they will not receive most of the protections or entitlements afforded to employees and workers under UK employment law.

Facts

To use their app, Uber requires drivers to show that they meet certain eligibility criteria. When switched on, the app will notify the driver of potential jobs nearby, giving them the option to accept or decline. Drivers who refuse three jobs in a row are automatically logged-out of the app for a set period and drivers are expected to accept at least 80% of jobs offered. Uber calculates the fee to be paid by the passenger and retains 25%.

The driver provides their own vehicle and is responsible for insurance and maintenance, although these must meet Uber's requirements. Drivers can decline nearby jobs or turn off the app when they do not wish to work, although their driver rating (which is visible to customers) and their future use of the app may be affected if they refuse too many jobs.

Mr Aslam and the other drivers involved in this case asserted that personal service and mutuality were present in their working arrangements with Uber and, therefore, that they were workers.

Uber's position was that it acted as an agent for drivers by facilitating the relationship between drivers and potential customers via its app. Uber therefore asserted that the drivers were contractors, in business on their own account.

Employment tribunal decision

The employment tribunal (ET) rejected Uber's argument that it was merely providing a service to the drivers, whom Uber claimed were self-employed contractors. 

The ET found that Uber dictated the terms of the contractual relationship to drivers and imposed a large number of controls on them, which were inconsistent with a contractor-client relationship. In particular, the ET found that Uber had near-complete control of how drivers provided their services to passengers, including dictating the maximum fare and the route to be taken, and noted that the driver did not even know the identity of the passenger or the destination until they picked them up. 

Although the contract specified that the drivers were contractors, the ET considered that the contract did not accord with the reality of the relationship and therefore set this aside.

Consequently, the ET found that the drivers were workers and therefore entitled to the various employment rights associated with that status.

Employment Appeal Tribunal decision

Uber appealed to the Employment Appeal Tribunal (EAT), on the grounds that the ET had made errors of fact and law in its judgment. It argued that the ET had not properly understood the nature of its relationship with its drivers.

In particular, Uber argued that the ET should not have disregarded the contractual arrangements between the parties, that agency relationships were common in the private vehicle hire sector and that many of the controls exercised by Uber were based on regulatory requirements.

The EAT rejected Uber's appeal and affirmed the ET's decision. The EAT commented that Uber's various controls went well beyond regulatory requirements, such as the requirement to accept 80% of jobs offered and the penalty for refusing three consecutive jobs. The EAT stated that the ET had taken a view of the relationship as a whole and had been correct to disregard the contract and find that the Uber drivers were workers.

Comment

The EAT's judgment confirms the ET's previous decision but it is binding and may lead to further litigation from Uber's estimated 40,000 UK drivers. It has been reported that Uber intends to appeal against this decision and is considering applying to appeal directly to the Supreme Court (using the new leapfrogging procedure and missing out the Court of Appeal).

While this decision is specific to Uber's business model, it highlights the point that ETs are often willing to look behind the contractual terms between companies and people who are described as contractors, to see if the contract reflects the true nature of the relationship between the parties. In some cases, ETs will set aside the contractual terms and hold that individuals are in fact workers or employees (with the associated employment law protections).

As a general rule, where a person appears to be subordinate to the company, with little or no say in how they perform their role or input into their contractual terms, they are unlikely to be a self-employed contractor. Any company that utilises contractors, particularly in low-level positions, should be aware of this decision and should consider reviewing its contractual terms and day-to-day relationship with its contractors to ensure that their status is correctly described.

However, cases that analyse employment status will always be specific to the circumstances of the relationship. This point is highlighted by this week's decision of the Central Arbitration Committee, which found that Deliveroo couriers were self-employed contractors and not workers since they had the genuine right to provide a substitute to do the work for them. The Independent Workers Union of Great Britain was not therefore entitled to trade union recognition in respect of them.

Patricia Heyen, lawyer at Womble Bond Dickinson (US) LLP, looks at similar litigation regarding Uber in the United States:

“In the United States, Uber drivers are continuing their long-running legal battle to challenge Uber’s classification of its drivers as independent contractors rather than employees, but no consensus has been reached among the courts. While Uber drivers have successfully argued that they should be deemed employees, rather than independent contractors, to a number of administrative agencies, courts have been less receptive of such arguments.  Additionally, the United States Court of Appeals and the United States Supreme Court have yet to rule on the issue.  Most recently, the Ninth Circuit Court of Appeals stayed eleven appeals by Uber in four separate cases brought by drivers, three of which alleged that the drivers were misclassified as independent contractors, including the much discussed O’Connor, et al. v. Uber Technologies, Inc. case filed in the Northern District of California. Given that many of the Uber drivers alleging misclassification signed arbitration agreements that prevent them from participating in class actions, the Ninth Circuit Court of Appeals held that it must first wait until the U.S. Supreme Court decides whether class action waivers in workers' arbitration agreements are enforceable under the National Labor Relations Act and the Federal Arbitration Act in Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris, and NLRB v. Murphy Oil USA, Inc. before the case can proceed on the merits.”