First Stop on the Road to Basic Workers' Rights: The Employment Status of Uber Drivers

In a landmark ruling, the London Central Employment Tribunal has found that a group of Uber drivers are to be deemed workers, rather than self-employed, and are entitled to receive the National Minimum Wage, in addition to holiday pay. This ruling, having the potential to affect tens of thousands of Uber drivers, needs to be considered in the context of drivers’ employment statuses and their existing rights, as well as the decision’s possible implications on other operators in the 'gig economy' sector.

Background

Uber operates a car hire platform that enables passengers to connect to drivers via a smartphone app. Passengers use the app to request that they are picked up by a driver from any location in London or hundreds of other cities in the world. If the request is accepted by the nearest driver, the passenger is able to watch as the car approaches on the map provided in the app. The passenger pays Uber the calculated fee for the journey, which in turn pays a percentage to the driver, who is also responsible for the provision and maintenance of their own vehicle according to standards set by Uber.

With support from the GMB Union, which represents private hire drivers, Uber drivers brought test cases to the London Central Employment Tribunal. They aimed to establish that they should not be considered to be self-employed contractors, but instead they should be treated as workers, and as such enjoy certain employment rights afforded to individuals who hold the said status in the UK. The drivers also submitted that Uber must ensure that they are paid the National Minimum Wage, as well as receive basic holiday pay.

The Drivers

The drivers argued that Uber exerts significant control over many aspects of its drivers’ work, thus invalidating the drivers’ classification as self-employed contractors. As an example, claimants put forward Uber’s control over drivers’ pay and its policy regarding declining a certain number of trips by the driver. A failure to pick the passengers up several times amounts to forcibly logging the driver off the Uber app for a time period of 10 minutes. Drivers also claimed that, as a result of the self-employed contractor classification, they are denied the statutory rights and protections that they are entitled to.

Uber

Uber denied the claim that its drivers are workers entitled to basic workers’ rights and contended that they work for themselves as self-employed business men and women. Uber argued that it is merely a technology company, rather than a taxi company, and only provides a platform facilitating the journeys. It also stressed that drivers are free to choose when and where they drive, as well as having the freedom to work for other companies, including other taxi services.

Considerations under UK employment law

Under UK law, employment status is a complex field. The legal framework distinguishes between self-employed, a worker, and an employee. Each status encompasses a distinct range of employment rights.

In order for a non-employee to qualify for worker status there is a requirement for a contract between the individual and another party (the 'employer') under which the individual personally performs work or services for another party, and the said party’s status is not that of a client or customer of a business operated by the individual. A self-employment status will apply if the above-mentioned criteria are not satisfied and it can be demonstrated that the individual runs the business for themselves bearing significant financial risk.

Unlike the self-employed, workers are entitled to a range of employment rights such as the National Minimum Wage, holiday pay, statutory annual leave or rest breaks. However, only the employees enjoy the full array of employment rights, including protection against unfair dismissal or a statutory minimum notice period.

Decision

In reaching the decision, the London Central Employment Tribunal acknowledged the need to distinguish between the times when drivers have the Uber app switched off and switched on. Having considered the differences, the Tribunal reached a conclusion that while the app is switched on and drivers are willing and able to accept assignments and are within the territory in which they are authorised to work, they should accordingly be classed as 'workers'. The workers classification was conferred upon the drivers within the meaning of the Employment Rights Act 1996, and for the purposes of the Working Time Regulations 1998, the National Minimum Wage Act 1998 and the associated Regulations.

In its judgment, the Tribunal was sceptical with regard to Uber’s submission that its 'product' is a technological platform, not taxi journeys, and that they are in fact a technological company. Furthermore, the judge expressed doubts in relation to Uber’s argument regarding the legal relationship between the company, the drivers and the passengers. The Tribunal commented that Uber had gone to remarkable lengths and resorted to 'fiction', 'twisted language' and 'brand new terminology' in its effort to compel an agreement with their arguments.

The judge also admitted that it is 'unreal' to deny that Uber is in business as a supplier of transportation services. The Tribunal argued that it is Uber, and not the drivers, who offers a variety of driving services, and emphasised that Uber’s marketing only promotes the company’s name and sells its transportation services. To that end, the Tribunal agreed with the point made in O'Connor v. Uber Technologies, Inc. case judgment:

Uber does not 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.

Furthermore, the Employment Tribunal found that Uber cannot be regarded as working for the drivers, but it is the drivers who provide the skilled labour through which the company delivers its services and earns its profits. Also, Uber was deemed to be significantly involved in the relationship between the driver and the passenger, exerting high control over many aspects of the drivers’ work, including the drivers’ lack of freedom in relation to fixing the fare, Uber’s acting as a payment intermediary between the passenger and the driver, dictating the default route, subjecting drivers to a rating system, or imposing penalties for cancelling trips.

As a result, Uber drivers are now entitled to a number of protections including the National Minimum Wage, holiday pay, regular rest breaks, protection against unlawful discrimination and whistleblowing. Also, there will be a further hearing in the Employment Tribunal to calculate the holiday and pay that Uber drivers ought to receive.

Implications of the decision

This landmark ruling is said to have wide ramifications not only for the thousands of Uber drivers working in the UK, but also for a range of workers in the so-called gig economy whose basic employment rights are not recognised due to alleged misclassification of the workforce. In fact, delivery couriers who work for Deliveroo, possibly encouraged by the successful claim of Uber drivers, have requested a 'voluntary recognition agreement' which could lead to Deliveroo negotiating worker conditions with union representatives.

Even though the decision sends a message as to how similar issues might be considered by the Employment Tribunal, the fact that Uber drivers have won their claim to be classed as workers does not necessarily mean that other cases brought by individuals working in the on-demand economy will be successful. Each case will still depend on the agreed terms and arrangements between the individuals and the companies that those individuals work for. Nonetheless, companies who rely heavily on the on-demand freelance workforce will certainly pay attention to emerging trends in this field as they might have significant implications on their business models.

Notably, this is a first level decision and Uber has confirmed it intends to appeal it. Therefore, the journey of Uber drivers to basic workers’ rights might not be over yet.