In a decision that may have implications for other companies in the “gig economy,” an employment tribunal in the United Kingdom has ruled that drivers who provide services to Uber, a ride-sharing service, are not self-employed contractors but “workers” within the meaning of the UK’s Employment Rights Act 1996 and other laws governing working time and the minimum wage, namely the Working Time Regulations 1998, the National Minimum Wage Act 1998, and associated regulations.

There are three main categories of staff recognized in the UK: (1) employees; (2) self-employed individuals (often referred to as “contractors” or “consultants”); and (3) workers, a broadly defined statutory concept that includes those who contract to provide work or services personally, even if not an employee. The distinctions between the three are important in determining which employment laws apply and employers’ obligations to employees, including in relation to wages, working time, and paid leave.

In Aslam, Farrar and Others v. Uber B.V. and Others, the Tribunal rejected Uber’s argument that it was simply a technology platform and not a supplier of transportation services, agreeing with the recent conclusions of the U.S. District Court for the Northern District of California which found that “Uber does not simply sell software; it sells rides.” In reaching its conclusion on the status of the drivers, the Tribunal highlighted, amongst other points:

  • the requirement for drivers to accept and/or not cancel trips;
  • Uber’s reservation of the right to unilaterally amend drivers’ terms;
  • Uber’s control of how drivers perform their duties;
  • the use of a rating system for drivers which was equated to a performance management/disciplinary procedure; and
  • contractual terms that did not reflect the practical reality and true relationship between Uber and its drivers, an issue which the Tribunal commented was caused at least in part by the unequal bargaining position of the parties.

As workers, Uber drivers will now be entitled to certain rights, including:

  • paid annual leave;
  • a maximum 48-hour average working week and rest breaks;
  • the national minimum wage (and the national living wage); and
  • whistleblower protection.

Contrary to some initial reports, the case was not about whether Uber drivers were employees, which would have entitled them to other rights including:

  • the ability to bring claims for unfair dismissal;
  • the right to statutory redundancy payments; and
  • protection under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

The decision was specific to Uber’s business model, with the Tribunal commenting that its reasoning should not be taken as doubting that Uber could have devised a business model not involving the employment of drivers. Nevertheless, the case serves as a reminder of the care that needs to be taken when considering employment status and drafting contractual documents for staff.

Unsurprisingly, Uber has already confirmed its intention to appeal the decision.