I have been writing about employment status since this blog started a number of years ago. One of the most widely reported cases dealing with the issue was published last week in Aslam, Farrar and others v Uber B.V., Uber London Limited and Uber Britannnia Limited. As most readers will know, Uber is a controversial transportation system which provides app based bookings for private hire taxi journeys. It operates in 66 countries and 507 cities. There are some 30,000 Uber drivers operating in the London area. Uber B.V. owns the smartphone app. Uber London Limited is a licensed private hire operator and Uber Britannia holds licenses for district councils outside London.
At a case management hearing in 2015 two “test claimants” were selected for a preliminary hearing to determine the question of their status in the context of employment law protection (the action was backed by the GMB union). They claimed that, as workers, they should receive the minimum wage and be entitled to paid holidays as well as protection from whistle-blowing. Uber contended that they were independent contractors and not workers, and therefore not entitled to the rights claimed. The preliminary hearing took place over five days between 19 July and 12 October 2016, with the decision published on 28 October. The tribunal summarised how the Uber system operates. Passengers register their information on the app, including credit or debit card details. Once registered they can request journeys by using the app. They do not have to state their destination but, if they do, they may choose to receive a fare estimate. Uber then locates the nearest available driver and notifies him of the passenger’s first name and rating (drivers and passengers can be rated on the app). He then has 10 seconds to accept the trip or it is offered to the next best matched driver. If accepted the driver is put in phone contact with the passenger to agree the pick-up location and advise about any delays but he is strongly discouraged from asking about the destination until he has picked up the passenger. Once the passenger is picked up the app specifies the route to the destination and this must be followed unless the passenger indicates otherwise. Once the journey is complete the driver confirms accordingly on the app and is then placed back in the pool of available drivers. The passenger pays via the app and the Uber software then generates what appears to be an invoice from the driver to the passenger. The driver is paid weekly based on the fares earned, less a service fee which is usually 25%.
The judgment sets out elaborate contractual terms issued by Uber which are clearly intended to give the impression that each journey is based on an independent contract made between the driver and the passenger. It would be fair to say that the tribunal was very unimpressed by the efforts made by Uber to give the impression that the arrangements did not amount to worker contracts.
The terms make clear that they are personal service contracts. Drivers cannot transfer the right to use the app and cannot provide any services via a substitute. There are also detailed specifications concerning the type of car that may be used. Passengers cannot be contacted after the trip ends, other than to return lost property. Drivers who decline three trips in a row are liable to be forcibly logged off the app for up to 10 minutes. The scoring system asks passengers to rate their driver on a scale of 0-5. Experienced drivers who do not score an average of 4.4 or more are “removed from the platform” and their accounts are “deactivated”. However, Uber contended that they provided drivers with “business opportunities” rather than jobs.
Section 230 of the Employment Rights Act provides that:
(3) In this Act “worker”…means an individual who has entered into or works under…a contract of employment, or…any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
The tribunal accepted that when the app was switched off there could be no question of any contractual obligation to provide driving services. However, when it was switched on, the relevant driver was working for Uber under a worker contract. In a particularly scathing section of the judgment the tribunal commented as follows:
In the first place, we have been struck by the remarkable lengths to which Uber has gone in order to compel agreement with its (perhaps we should say its lawyers’) description of itself and with its analysis of the legal relationships between the two companies, the drivers and the passengers. Any organisation (a) running an enterprise at the heart of which is the function of carrying people in motor cars from where they are to where they want to be and (b) operating in part through a company discharging the regulated responsibilities of a PHV operator, but (c) requiring drivers and passengers to agree, as a matter of contract, that it does not provide transportation services (through UBV or ULL), and (d) resorting in its documentation to fictions, twisted language and even brand new terminology, merits, we think, a degree of scepticism. Reflecting on the Respondents’ general case, and on the grimly royal evidence of Ms Bertram in particular, we cannot help being reminded of Queen Gertrude’s most celebrated line: ‘The lady doth protest too much, methinks’.
The tribunal also agreed with an observation made in a case in the North California District Court:
Uber does no simply sell software; it sells rides. Uber is no more a “technology company” than Yellow Cab is a “technology company” because it uses CB radios to dispatch taxi cabs.
It continued that it found that the notion that Uber is a mosaic of 30,000 small businesses linked by a common ‘platform’ was “faintly ridiculous”.
Although Uber has said that it will appeal the decision, it is comprehensive (130 paragraphs), well reasoned and, in my view, meticulous. I have seen it described by a respected legal blogger as “appeal-proof”.
Nonetheless, it has attracted criticism. Some Uber drivers have said that they are happy with the existing arrangements and do not see the need for change. Predictably, the right-wing think tank the Institute of Economic Affairs is among the critics:
The nature of the labour market is changing, with more people self-employed than ever before. Sharing platforms such as Uber have had a huge part to play in this change that allows people greater flexibility in their work. They should be applauded for enabling these positive changes to Peoples’ working lives, not restricted by senseless rulings such as this.
The new term ‘gig economy’ has come into use recently to describe ‘an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements’. Taking that into account, legal observers have pointed out that the decision is likely to have a wide-reaching impact in many sectors, including couriers, fast food delivery companies and portable services such as mobile cleaning and repair companies.
If you use people who are currently classified as independent contractors, now is the time to review the contracts. Failure to do so could result in substantial claims for minimum wage payments, paid holidays and working time claims. For advice, contact Martin Malone at email@example.com / 0151 239 1003.