An employment tribunal has ruled that drivers engaged by Uber are ‘workers’, not self-employed contractors, meaning they will be entitled to national minimum wage, paid annual leave and whistleblower protection.
The taxi-hailing firm has attracted significant media interest over its business model since its launch in the UK. Service users can hail a cab via an app which the drivers access and then choose whether to accept the fare. They are not obliged to accept fares or work at any particular times, nor are they obliged to work exclusively for Uber. The company doesn’t own the cars used by the drivers, who are responsible for the running costs. Uber therefore maintained that the drivers were self-employed independent contractors, but some drivers claimed that certain attributes of their working arrangements meant they were eligible for “worker” rights. For instance, they pointed out that Uber controls how much passengers are charged, requires drivers to follow particular routes and uses a ratings system to assess their performance. Two Uber drivers, supported by the trade union GMB, brought a tribunal claim.
The tribunal found that the drivers were not ‘self-employed’ but ‘workers’. It disagreed with Uber’s presentation of its business as a technology platform, rather than a taxi business, facilitating the connection of self-employed drivers with customers through the app. On the facts, the tribunal found that this did not reflect the practical reality.
Instead, the tribunal considered that the drivers undertook to provide work personally under a contract for Uber and so fell squarely within the definition of “worker” in the Employment Rights Act 1996 (and the working time and national minimum wage legislation). In the tribunal’s view, the drivers were working for Uber when the app was switched on, the drivers were within the working territory in which they were licensed to use the app and were able and willing to accept assignments. In reaching this view, the tribunal seems to have been influenced by the efforts Uber made to control its own brand and the related level of control it sought to exercise over its drivers.
This is the first case that has tested employment status in the rapidly expanding ‘gig economy’ and, as such, has received significant attention. However, it is only a first instance decision and so other tribunals are not bound to follow it. In addition, it is also very ‘fact-sensitive’ and so businesses operating similar models could try to distinguish it in seeking a different result. To be clear, The Uber tribunal decision does not rule out flexible business models which use self-employed individuals. Indeed, the tribunal suggested that Uber could have used an alternative model which would have resulted in a different decision (although it did not state how much Uber would have needed to change the existing model).
However, it is also true that the decision has potentially substantial financial consequences for Uber (which engages around 40,000 drivers in the UK) and that the impact could be much wider. Other businesses operating in the gig economy have every reason to be concerned that their working arrangements could face a similar challenge in the future. In fact, the GMB intends to take a proactive approach and has warned that the “GMB puts employers on notice that we are reviewing similar contracts masquerading as bogus self-employment, particularly prevalent in the so called ‘gig economy’. This is old fashioned exploitation under new-fangled jargon, but the law will force you to pay GMB members what they are rightfully due.”
Uber has already indicated that it will be appealing the tribunal’s decision and given the significance of the outcome, we are unlikely to have a final determination for some time. However, businesses operating similar models who are reliant on self-employed individuals should scrutinise their existing arrangements and practices carefully if they wish to minimise the prospects of those performing services for them being deemed to have “worker” status.