In October 2016 Uber drivers James Farrar and Yaseen Aslam brought claims to the central London Employment Tribunal on behalf of a group of 19 others who argued that they were employed by the California based firm, rather than being self-employed.
The Employment Tribunal determined (as a preliminary issue) that they were workers and were therefore entitled to be paid national minimum wage, holiday pay and to take breaks. This decision was based largely on the degree of control exercised by Uber over the workers, namely that it interviews and recruits drivers, punishes drivers who frequently refuse/cancel trips by logging them off the app, handles complaints, including complaints about drivers, and reserves the right to unilaterally change the drivers’ terms.
Uber immediately appealed to the Employment Appeal Tribunal on the basis that the Employment Tribunal had erred in law in disregarding the written contracts between Uber and its drivers, which were inconsistent with the existence of any worker relationship. In dismissing Uber’s appeal, the Employment Appeal Tribunal determined that the Employment Tribunal had been right to reject Uber’s characterisation of the relationship between Uber London Limited and the drivers as one of agency as set out the written contracts. Uber challenged the ruling at the Employment Appeal Tribunal warning that it could deprive drivers of the personal flexibility they value. It claimed that the majority of its drivers prefer their existing employment status. This decision was further appealed by Uber to the Court of Appeal.
The Court of Appeal has upheld the decision of the Employment Appeal Tribunal that Uber drivers are to be classed as ‘workers’ instead of self-employed contractors. For these purposes, under S230(3) of the Employment Rights Act 1996 a worker is an individual who works under a contract, undertakes to do or perform personally work or services for another party where the individual is not doing the work through a business in their own right.
Uber had argued that it acted solely as an agent, linking its drivers and their passengers, through the app by providing booking and payment services, with the drivers transporting passengers as independent contractors.
The Court of Appeal relied on the principle established in Autoclenz v Belcher & Others in which it was determined that where a party asserts that a written term does not reflect the reality of the agreement, an Employment Tribunal or Court may look outside the terms to determine the true nature of the agreement.
In addition, two out of three Appeal judges determined that Uber’s drivers are under a positive obligation to be available for work whilst they are logged into the app, which they say amounts to “work” under the regulation 36 of the Working Time Regulations 1998, for the purposes of calculating rest breaks and minimum wage.
Uber has been given permission to appeal to the Supreme Court.
This alert does not provide a full statement of the law and readers are advised to take legal advice before taking any action based on the information set out above. If you would like specific advice in relation to any employment law or HR related issues please contact Joanne Holborn, Tom Scaife or Caroline Rayner on 01228 552600 or 01524 548494.