The company behind car-hailing app Uber is currently the subject of an employment tribunal claim by two of its drivers, who claim that they are 'workers' under UK employment law and are therefore entitled to receive the national minimum wage, statutory sick pay and holiday pay. Uber is strenuously defending the claim, arguing that the drivers are self-employed contractors and not entitled to the protections enjoyed by individuals with worker or employee status. 

While the tribunal has now retired to consider its decision and is unlikely to deliver its judgment for some time, the case highlights some of the challenges being posed to established views on employment status in the UK, particularly by new business models emerging from the sharing economy, where interactions of all types increasingly take place online. Usage of digital applications like Uber, Deliveroo and others, which provide people with access to workstreams with maximum flexibility in hours and workload but minimal employment protection, is steadily growing as a source of work and the relationships between these companies and their users appear to defy existing categorisations of employment status. 

In this article, we consider the existing categories of employment status and what the future might hold for this status quo in the sharing economy.

'Employee' and 'worker' status

There are three main employment statuses under UK employment law: 'employee', 'worker' and 'contractor' (the latter being self-employed), each with different definitions and associated levels of statutory protection. Which category a person falls into depends on a number of factors but the key principles are as follows:

Personal service  

Whether the person is required to provide the service personally

Mutuality  

Whether the employer is obliged to provide the person with work and, in turn, the person is obliged to undertake work that is provided

Control    

Whether the employer has the power to control the person by dictating how, when and where work is to be carried out

If all three of the above factors are present, the person will be an employee and benefit from all of the relevant protections under UK employment law. 

Where personal service and mutuality are present, but there is not sufficient control over the person, they will have worker status. Worker is an intermediate status between employee and contractor and gives some employment protections to those who fall short of employee status but who have a degree of subordination to the employer and cannot be said to be carrying on their own business, supplying their services to a customer (rather than an employer). Workers receive a lesser degree of employment protection than employees but do receive some important entitlements and protections, including under the Working Time Regulations and National Minimum Wage Regulations, entitling them to receive paid annual leave and the national minimum wage or national living wage.

Where none of the above factors are present, the person will be a contractor in business on their own account and will be in a service-provider – client relationship, rather than an employer – employee/worker one. Consequently, they will not receive most of the protections or entitlements afforded to employees and workers under UK employment law.

Uber and the challenge of digital business models

Uber and other business models emerging from the digitally-driven sharing economy have an increasingly loose and creative relationship with their end-users.

Uber's position is that it merely facilitates the relationship between taxi drivers and potential customers, with the former being contractors in business on their own account.

The Uber drivers in this case contend that personal service and mutuality are both present in this arrangement and that they are therefore workers. 

Uber requires drivers to show that they meet certain eligibility criteria, following which they may download the Uber app. When switched on, the app will notify the driver of potential jobs nearby and he or she has the option whether to accept them. The driver receives a fee for each job that is accepted and completed, with Uber calculating the fee to be paid by the customer and retaining 25%.

The driver provides their own vehicle and is responsible for all insurance and maintenance costs, although the car and the insurance must meet Uber's requirements. Drivers have the option to decline nearby jobs or turn off the app when they do not wish to provide taxi services, although their driver rating (which is visible to Uber customers) and their future use of the app may be affected if they refuse too many consecutive tasks. Drivers are also expected to provide a minimum number of hours' service.

The tribunal is likely to find that Uber drivers are providing a personal service, as they do not have the right to provide a substitute or otherwise delegate their responsibilities; when they do not wish to offer their services, they can refuse the job or turn off the app. 

Therefore, the key question for the tribunal is whether there is mutuality of obligation between Uber and its drivers. Uber is likely to argue that the drivers have no obligation to accept jobs and can refuse jobs or turn off the app when they do not wish to work. However, the tribunal may choose to look beyond the driver's ability to accept or decline individual jobs and look at the context of the wider relationship, in which there are adverse consequences for drivers who refuse too many jobs or do not maintain a certain volume of work. It is also possible that the tribunal may place a wide interpretation on mutuality in order to give worker protection to the drivers, given the imbalance in bargaining power between the parties.

Conclusion

Whatever the outcome of the case, it seems likely that the losing party will appeal, given that the drivers are supported by the GMB trade union and the financial consequences for Uber if it loses would be likely to make its current business model unviable in the UK. It is worth noting that Uber settled a similar case in the US earlier this year, so that Uber drivers there maintained their status as independent contractors. 

It is also unlikely to be the last case of its type, given that on-demand, crowd-sourced labour is increasingly available via digital applications like Uber and existing UK law on employment status will need to develop to adequately deal with the looser relationships between these companies and their labour force. 

As this area of law develops, the courts and Parliament will need to strike a balance between allowing people to take advantage of the undoubted benefits of looser working relationships and making sure that a large, growing section of the nation's work force is adequately protected.