Majority of Court of Appeal find that Uber drivers are Workers

Published 20 December 2018

The Court of Appeal (CoA), by a majority, has upheld the Employment Tribunal and Employment Appeal Tribunal (EAT) decisions that Uber drivers should be classified as 'workers', not independent self-employed contractors, and therefore are entitled to employment rights such as holiday pay, rest breaks and the minimum wage. This is now likely to be subject to an appeal to the Supreme Court.

Key aspects of the judgment

Are the drivers workers or self-employed?

The key question as regards worker status was whether, as the drivers argued, Uber contracts with the passengers to provide driving services, which the drivers perform for it; or whether, as Uber argued, it acts only as an intermediary, providing booking and payment services, and the drivers have a contract with the passengers and therefore drive them as independent contractors.

The contractual documentation between the parties details the second scenario; however, the majority of the CA held that it does not reflect the practical reality of the relationship. They also emphasised that Uber had a high degree of control over the way the driver must perform which gave weight to the argument that the drivers were workers.

However, one of the Judges, Lord Justice Underhill found no inconsistency between the contractual terms and the reality of the situation. He said that on the contrary, it is in accordance with a well-recognised model for relationships in the private hire car business where minicab drivers' services have to be pre-booked using an intermediary model.

When are they "working"?

The Court looked at the period during which drivers are to be regarded as working. Drivers are free to decide whether to switch the app on at all and when it is switched on they have the right to choose whether to accept any particular trip offered. However Uber has the right to disconnect drivers from the app for a period if they turn down offers too frequently.

The majority of the CA held that in those circumstances drivers are under a positive obligation to be available for work while the app is on - that they were therefore to be regarded as working during any period when they were within their territory (i.e. London), had the Uber app switched on and were ready and willing to accept trips.

Lord Justice Underhill disagreed on this point too - his view was that drivers should only be treated as working from the moment that they accept a particular trip.

What does this mean for employers?

The Court of Appeal ruling is not a major surprise in the sense that it upholds the previous decisions of the Employment Tribunal and EAT. What is interesting is that this was a split decision, with Lord Justice Underhill, giving a dissenting opinion and raising some compelling points in favour of Uber's arguments. Perhaps in recognition of that the Court of Appeal has given Uber permission to appeal to the Supreme Court, and Uber has said it will do so. So there will still be uncertainty for some time yet.

What remains clear is that the issue of worker status continues to be an issue of significance for employers and individuals alike, and one which polarises opinion. The implications of this case are clearly wider than the Uber drivers. It also follows the trend to closely scrutinise purported "self-employed" status. Although a number of business models and practices have been found to be incompatible with genuine self-employment by the courts and tribunals, all cases are heavily fact-sensitive. As such, other businesses who wish to use a freelance workforce should carefully consider the terms and arrangements they put in place, whilst remembering that what happens in practice will be as important as the terms and conditions written into any agreement with individuals.

This decision is also timely given the Good Work Plan published by the Government earlier this week (see our alert here). Lord Justice Underhill in fact referred to the Taylor Review in his judgment. The Good Work Plan outlines proposals to "legislate to improve the clarity of the employment status tests, reflecting the reality of modern working relationships" and also to try to streamline the employment status tests so they are the same for employment and tax purposes. However, before doing this the Government has commissioned independent research to find out more about those with uncertain employment status, to understand how best to support them when bringing forward legislation.

We will of course keep you updated about the appeal to the Supreme Court and any relevant legislative developments.

Background

Uber has a smartphone app by which passengers can book rides from drivers who also have the app. The drivers own their own cars and are free to choose when they make themselves available to accept bookings.

The case which give rise to these appeals were brought by Uber drivers against the company claiming holiday pay under the Working Time Regulations 1998 and under-payments of wages under the National Minimum Wage Regulations 1999.

In order to bring their claims it is necessary for the drivers to first establish that they are “workers” within the meaning of the Regulations. The Employment Tribunal held a preliminary hearing to decide that question; and also, if the drivers were workers, the period during which they were working, which is necessary for the calculation of any holiday pay and wages due. It held (1) that the drivers were workers; and (2) that they were to be regarded as working during any period when they were within their territory (i.e. London), had the Uber app switched on and were ready and willing to accept trips. The EAT and now the CoA have upheld that decision.