Uber – The Verdict Is In!
You may recall that the gig economy firm, Uber, recently appealed a decision by the Employment Tribunal which classified two Uber drivers as workers. The Employment Appeal Tribunal (“EAT”) heard the appeal in September and have now dismissed it, confirming the earlier decision to be correct.
The distinction between workers and self-employed persons is an important one for business operating in the gig economy as greater protection is afforded to workers under our employment laws. The additional rights provided to workers can come at a cost to employers, with workers being entitled to paid holidays, the national minimum wage, a maximum of 48 hour working weeks with rest breaks and protection under the whistleblowing legislation. The employment status of such workers can be difficult to ascertain with Courts having to scrutinise whether individuals can be perceived as being genuinely self-employed.
The Uber case was first brought in the Employment Tribunal last year where it was held that two drivers were workers under the Employment Rights Act 1996 and not self-employed as Uber had argued. The result meant that the drivers were entitled to additional worker protections. Uber argued that they were only a technology platform putting drivers in touch with passengers via their app and that they were not in any way a provider of taxi services. They argued that in this arrangement, their workers were self-employed and that this was supported by their contractual documentation.
The tribunal disagreed, confirming that the actual reality of the arrangement between Uber and its drivers was not as demonstrated in their contractual arrangement and that the amount of control exerted over the drivers by Uber (amongst other reasons) meant that the drivers were in fact engaged as workers.
Uber appealed the decision.
The EAT heard the appeal on 27 and 28 September and have now provided their long-anticipated decision.
They have confirmed that the previous tribunal were correct in seeking to look beyond the contractual documentation and instead consider the true reality of the situation and the obligations placed on the drivers. This involved considering the actual status of the workers, without focusing solely on the labels used by the parties themselves. They confirmed that the earlier tribunal were right in reaching a decision based on facts and not primarily on any agreements or contractual arrangements. In responding to Uber’s stance that they were operating as other taxi hire firms do, the EAT accepted that there could be a situation whereby individual drivers in the taxi hire industry could be operating as separate, and independent businesses, but that this was not the case here and that the workers were integrated into the Uber business.
Uber had also argued that because the drivers had the choice to refuse work or to cancel booked trips, and were entitled to work for other companies, they could not be seen to fall into the legal definition of worker. The EAT confirmed that although this aspect of the appeal was a compelling one, the fact that once signed into the app the drivers were expected to accept a high percentage of trip requests demonstrated that at this point they were under the control of Uber as a worker.
There is an increasing number of businesses operating within the gig economy who are working on the basis that they are engaging self-employed individuals. Businesses should review their own contractual arrangements, checking whether documents and the reality of the situation are consistent with each other. What is certain is that worker status cases are not going anywhere and further developments are extremely likely.
This bulletin is for general guidance purposes only and should not be used for any other purpose.
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