Uber provides taxi drivers with access to its ride-hailing app to enable them to connect with and provide driving services to passengers (riders) using its innovative business model. Uber has maintained throughout the litigation that it acts as an agent for its drivers. The tripartite agreement between Uber BV, the drivers and their passengers is clear that the contractual arrangement for transportation services is between the Uber drivers and their passengers, not Uber.
Although there is no obligation to accept work, once logged onto the app the driver is considered able to accept bookings. If a driver continually fails to accept bookings he or she can be penalised and even have the app suspended. Uber has had a difficult time in the Employment Tribunal and the Employment Appeal Tribunal where it unsuccessfully argued that it was simply a technology platform facilitating the provision of taxi services between passengers and self-employed drivers.
Court of Appeal
The Court of Appeal by a majority has upheld the Employment Appeal Tribunal's decision and found that the drivers are in fact workers. It is worth noting that Lord Justice Underhill disagreed providing a detailed dissenting judgment. Lord Justice Underhill found no inconsistency between the contractual terms and the reality of the situation and likened the Uber operation to minicab drivers whose services have to be pre-booked using an intermediary model.
The reality of the relationship
The Court of Appeal rejected the agency label used in the written contracts and following the principles established by the Supreme Court in Autoclenz Limited v Belcher looked behind the contract. The Court found that the contractual terms did not reflect the practical reality of the relationship – the driver did not have a contractual relationship with the passenger. The Court laboriously considered the thirteen reasons set out by the Employment Tribunal culminating in the drivers being classed as workers. Although there is some room for movement, consideration was given to the large degree of control Uber has over the fare and the route taken. The Court of Appeal agreed with the Employment Tribunal that Uber is a transportation business and the drivers provide skilled labour – the drivers work for Uber, not the other way round.
The question was considered as to what period the drivers are to be regarded as working. Drivers can choose whether to switch the app on at all and when it is on they have the right to choose whether to accept a particular job offered. However, Uber can penalise drivers who refuse work too frequently. The majority held that while the app is on drivers are under a positive obligation to be available for work and that amounts to "Work" for the purpose of the Working Time Regulations. Lord Justice Underhill dissented on this point too finding that drivers should only be treated as working from the moment they accept a particular trip.
Subject to any appeal lodged by Uber (permission to appeal has been given) the case will now be remitted to an Employment Tribunal to consider the claims themselves. Lord Justice Underhill's dissenting judgment inevitably strengthens the likelihood of an appeal. There are press reports that Uber intend to appeal to the Supreme Court.
This latest decision is perhaps unsurprising and certainly consistent with recent decisions on employment status. Employment status cases have continued to hit the headlines throughout 2018 with worker status remaining the predominant finding. Earlier this year Pimlico Plumbers were defeated in the Supreme Court when a plumber was found to be a worker. The Employment Appeal Tribunal continued the trend with a successful outcome for Addison Lee drivers when they were found to have worker status. The Courts and Tribunals are showing a willingness to look behind the contract and establish the reality of the relationship.
Following the Taylor Review the Government has this week unveiled its Good Work Plan (the Plan). The Plan outlines proposals to "legislate to improve the clarity of the employment status tests, reflecting the reality of modern working relationships". Considering the complexity of this area of law, it is difficult to envisage how legislation will be able to clarify the tests. We have seen decades of case law applying the core tests (personal service, control, integration) to evolving employment practices. Applying a strict legal test may have the unintended consequence of in fact increasing litigation.
Innovative, technology based businesses undoubtedly play a key part in the future prosperity of the UK. The Plan highlights the importance of innovation stating: "Businesses have been able to thrive and create jobs in record numbers as a result of flexibility and a celebration of innovation". When considering legislation the Government will need to balance the benefit of accelerated economic growth against human factors in the labour market, including facilitating a rewarding working life.
We will keep you updated.