The EAT has upheld an employment tribunal decision that two Uber drivers were workers, not self-employed contractors, and were therefore entitled to the national minimum wage and paid holiday.
There has been a spotlight on the employment status of workers this year and, although the judgment of the Employment Appeal Tribunal (EAT) about the status of Uber drivers has been eagerly anticipated, the decision to uphold the finding that the Uber taxi drivers were ‘workers’ and therefore entitled to the national minimum wage and paid holiday comes as no real surprise.
While each case turns on its facts, there appears to be a growing trend to find that individuals operating in the gig economy and purportedly engaged on a self-employed basis are in fact workers for the purposes of employment rights. This is especially so where the business retains a significant degree of control over how the individual works and where there is no right of substitution.
In July last year, a London employment tribunal heard a test case brought by two Uber drivers. In a highly publicised decision, the tribunal found that the drivers were workers for the purposes of employment legislation and not self-employed contractors. Therefore the drivers were entitled to various rights available to workers, including the national minimum wage and paid holiday.
The tribunal was not persuaded by Uber’s defence that it was simply operating as a technology platform facilitating taxi rides by allowing self-employed drivers to offer their services to passengers via the Uber app. The tribunal went on to say that the notion that Uber, in London, was a ‘mosaic’ of 30,000 small businesses linked by a common platform was not plausible. In terms of the relationship between the drivers and Uber, the tribunal identified a number of components in their relationship with Uber which they thought to be significant indicators that the drivers were 'workers', including that:
- Uber interviews and recruits drivers
- it controls key information as to the passenger’s identity and destination which is not shared with the driver
- it requires drivers to accept trips (with consequences for those in breach)
- it imposes conditions on drivers, instructing them on how to do their work
- it fixes the fares
- it controls the drivers in the performance of their duties.
Uber appealed to the EAT.
The EAT confirmed that the Uber drivers were workers and were therefore entitled to the national minimum wage and paid holiday. The EAT also approved the tribunal's finding that the drivers could be considered to be working when they had the Uber app switched on, were within the territory in which they were authorised to work (i.e. London) and were able and willing to accept assignments.
The EAT held that the tribunal was entitled to reject Uber’s characterisation of the relationship as set out in its written contracts and to conclude that the reality of the situation was not one of Uber acting merely as an agent for drivers carrying on businesses in their own account as self-employed contractors. In coming to this conclusion, the EAT paid particular attention to the level of control exerted by Uber over its drivers and the fact that if its drivers were truly independent, they would be able to refuse or cancel jobs as they wished.
The EAT confirmed that a tribunal must assess the whole factual matrix of each case and, importantly, further acknowledged that any assessment of the time for which Uber would be required to pay the national minimum wage would be dependent on the specific facts of each case. If, for example, a driver was genuinely able to hold themselves out as at the disposal of other private hire operators while waiting for trips from Uber, the EAT stated that the same analysis would not have applied. This finding and the fact that each case will need to be assessed on its own facts is likely to lead to further uncertainty as to exactly what drivers or other workers operating in this space have to be paid.
What does this decision mean for your organisation?
Subject to any appeal, the EAT's decision is now binding on other employment tribunals and as a result, may have ramifications for other employers using self-employed personnel and/or app based services.
While the decision does not mean that you cannot successfully operate a business model whereby your labour is genuinely self-employed (and the tribunal did in fact expressly acknowledge this), it is clear that the mere label given to the relationship or the individual's status for tax purposes will not be determining factors and it will be necessary to consider the reality of your relationship. This will require close analysis of your contractual arrangements and working practices to help identify any risk areas and to enable you to identify any changes which might be appropriate or any unforeseen costs which might be incurred.
The Taylor Review of Modern Working Practices, published in July, highlighted the difficulties caused by the current lack of clarity around establishing employment status. The government is considering whether, how and when to implement any of the recommendations in the Taylor Review and it will be interesting to see if the EAT’s decision prompts the government to take steps to address this important issue for the benefit of both individuals and employers alike.
Theresa May has committed to taking "this agenda forward in the months ahead" but it is likely to be a while before we see significant concrete reform. However, no reform at all is unlikely, so businesses should expect developments and plan accordingly. For more details, read our briefing on the Taylor Review.
We will continue to monitor developments arising from the Taylor Review and we are also awaiting the outcome of an appeal to the Supreme Court in another significant case on employment status involving Pimlico Plumbers.