Employment Tribunal ruling puts Uber workers in the driving seat

November 3, 2016
Employment Tribunal ruling puts Uber workers in the driving seat

An individual’s employment rights depend on his or her employment status, namely whether they are “a self-employed contractor”, “a worker” or “an employee”.

In last week’s case of Aslam and others v Uber BV and others, the London Central Employment Tribunal was asked to decide whether the claimant Uber drivers were, as Uber had been treating them, self-employed contractors or, as the drivers claimed, “workers” under the relevant statutory provisions. In what is a very significant ruling not only for Uber (and its approximately forty thousand UK drivers) but also for other businesses relying on individuals operating within the so-called “gig economy”, the Tribunal decided that the drivers were “workers” (not genuinely self-employed) and that they were therefore entitled to paid annual leave, the national minimum wage and whistle-blower protection.

Whilst Uber argued that it is merely a “platform” utilised by independent drivers to grow their own businesses, the Tribunal highlighted that Uber runs an enterprise whose central function is the carrying of people in cars from one point to another and it operates, in part, through a company which is regulated as a private hire vehicle operator. The Tribunal agreed with the findings of the North California District Court, in a similar case brought by drivers in California, that ‘Uber does not simply sell software; it sells rides.

With regard to the nature of the relationship between Uber and its drivers, although the language in various terms and conditions issued to drivers did not reflect reality, Uber’s correspondence and marketing material boasted of providing job opportunities, potentially generating tens of thousands of jobs in the UK and paying its drivers on a commission basis. Also, the Tribunal noted in particular that:

  • the terms for passengers contradict themselves insofar as they state that Uber is the drivers’ agent but at the same time asserts Uber’s ‘sole and absolute discretion’ to accept or decline bookings;
  • Uber interviews and recruits drivers (in the same way a business might interview potential employees);
  • Uber controls key information as to a passenger’s identity and intended destination and does not share this with the relevant driver;
  • Uber imposes conditions on drivers, instructing them on how to do their work and controlling them in the performance of their duties;
  • Uber requires drivers to accept and/or not to cancel a certain number of trips and enforces this requirement by logging off drivers who breach it (in other words it invokes disciplinary sanctions for drivers who do not comply);
  • Uber subjects drivers through its rating system to what is effectively a performance management/disciplinary procedure;
  • Uber sets the default route for each trip and the driver may face deductions (i.e. a sanction) from their fare if they depart from it;
  • Uber fixes the fare and the driver cannot agree a higher sum with the passenger;
  • Uber determines issues about rebates for passengers, sometimes without involving the driver affected;
  • Uber accepts the risk of loss, for example where a passenger soils a vehicle or in the case of fraud, which if the drivers were genuinely in business on their own account would fall on them;
  • Uber handles passenger complaints;
  • Uber used to operate a scheme guaranteeing minimum earnings for new drivers;
  • Uber reserves the right unilaterally to amend drivers’ terms; and
  • Uber generates “fake” invoices on behalf of its drivers but that are never sent to passengers.

In light of the above, the Tribunal found that that Uber’s assertion in its terms and conditions that the driver enters into a contract with each passenger to provide the transportation service was absurd; since neither party knows the identity of the other, the route is set by Uber and the price is calculated by and paid to Uber. A contract between a driver and a passenger could therefore not exist.

Another point in favour of the drivers’ case was the unequal bargaining positions of the parties, the Tribunal noting that many Uber drivers do not have English as a first language and will not be accustomed to interpreting legal documents, which the Tribunal considered simply misrepresented the true rights and obligations on both sides.

However, in what some may see as faintly encouraging for businesses which rely on individuals operating within the so-called gig economy, the Tribunal suggested Uber could have devised a business model which did not involve it employing drivers; it was simply that Uber’s chosen model failed to achieve such aim. Also, Uber has confirmed that it will be seeking to appeal the decision.

In the meantime, businesses who consider they may be affected by the Tribunal’s findings may wish to reassess their relationships with self-employed members of their workforces, both in terms of how those relationships operate in practice and are documented, to avoid potentially costly and time consuming disputes.

Neil Gill, Associate

This update is for general guidance only. Legal advice should be sought before taking action in relation to specific matters.  Visit the employment page of our website for more information about our employment law services.

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