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Commercial & Employment

Don’t Get Uberexcited

Posted on 2nd November 2016

matthew_pascallBy Matthew Pascall, Barrister, Guildford Chambers

  • The Uber decision has not made new law and is highly fact sensitive;
  • Businesses need to be sure they understand the consequences of the arrangements they have with casual staff;
  • Individuals working in the “Gig Economy” should not assume that they have signed away their employment rights on the basis of the agreements they may have signed with those for whom they work.

Aslam and Farrar and othrs v Uber BV, Uber London Ltd & Uber Britannia Ltd Case No’s 2202550/2015

1.      In a reserved judgment following a Preliminary Hearing at the Central London Employment Tribunal, the Tribunal has set out its reasons for holding that the Claimants were “workers” within the meaning of section 230 (3) (b) of the Employment Rights Act 1996 and within the meaning of section 43K of the 1996 Act (which contains a slightly different definition of “worker”). This is a first instance decision and it is understood that the Respondents (“Uber”) are to appeal to the EAT.

2.      Section 230 (3) (b) states: -

(3)     In this Act “worker” (except in the phrases “shop worker” and “betting worker”) means an individual who has entered into or works under (or, where the employment has ceased, worked under)—

(a)   a contract of employment, or

(b)   any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;

and any reference to a worker's contract shall be construed accordingly.

3.      In the Uber case the real issue was whether or not the Claimants were caught within sub-paragraph (b) (“Limb B workers”).

4.      Applying section 230 (3) (b) to the case, the issues can be defined in the following way: -

i)  Are the drivers the “individual[s]” or potential workers;

ii)  Is there a contract between the driver and Uber under which the driver undertakes to do or perform personally any work or services for Uber.

iii)  Is Uber a client or customer of any profession or business undertaking carried on by the driver.

5.      The contentious issues was ii). Put more simply, did the driver claimants personally perform work or services for Uber? In short, the ET decided that they did.

6.      The facts are set out in paragraphs 13 to 69 of the reserved judgment and to fully understand the rationale underlying the decision, these paragraphs should be read with care. The facts are a little confusing because of the existence of three Uber corporate entities but for present purposes they can be referred to collectively as Uber. The Respondents sought to argue that the drivers did not perform work or services for Uber.

7.      In paragraphs 13 to 69 the Tribunal looked with great care at the various agreements between Uber and the drivers and at the way the arrangements worked in practice. In broad terms the Tribunal concluded that the relationship between drivers and Uber was close and that Uber exercised a significant degree of control over the drivers.

8.      Having switched on the Uber driver app, a driver is directed to passenger/s close to his location. He will have been allocated and “offered” those passengers based on his proximity to them. Drivers can decline to accept the “offered” passengers but must do so within 10 seconds. The passenger/s will have already received a quoted fare from Uber via its passenger app. The driver may agree a reduced fare but cannot charge above the Uber quoted fare. The driver is then given a route to follow via his Uber app. At the conclusion of the trip no money changes hands between driver and passenger – the passenger’s registered debit or credit card is charged by Uber who subsequently pass on the fare to the driver less a charge (25% of the fare). Drivers are rated by passengers – poorly rated drivers are penalised by Uber in terms of access to the app. Drivers are also penalised if they cancel accepted trips or reject offered trips. Drivers are discouraged from any sort of contact with a passenger or past passenger outside the scope of the booking system comprised in the app.

9.       The Tribunal reviewed the leading cases on the definition of worker, in particular, the EAT decision in Byrne Brothers (Formwork) Ltd v Baird [2002] ICR 667 and the Supreme Court decisions in Bates van Winkelhof v Clyde & Co LLP [2014] 1 WLR 2047 and its earlier decision in Autoclenz Ltd v Belcher [2011] ICR 1157.

10.  The Tribunal concluded that when drivers switch on their driver apps and until they switch them off at the point in time they decide that they will no longer accept trips, they are “workers.”

11.  When looking at the arrangements under which Uber drivers work, it is easy to understand how the Tribunal came to its conclusion. For whom other than Uber did the drivers perform services? The overall substance of the arrangements left the clear impression that the drivers performed services for Uber. The EAT may come to a different conclusion but given the fact sensitive nature of the decision, there may be little scope to argue that the decision was wrong in law or perverse.

12.  The lesson to learn from the Uber case is the need to look at the reality underlying the relationship between a potential worker and the individual for whom, it could be said, he or she works. In layman’s terms, if it looks as if A works for B, A is likely to be a worker. A might well not be an employee of B but, as a worker, A will have certain employment rights. To dress the arrangement up under the guise of an agreement will make no difference. To misquote a great judge: You can call a five-pronged garden implement anything you like but it will always be a fork[1].

13.  We will see in time how the EAT approaches this case. But in the longer term employment rights in the “Gig Economy” are to be the subject of a review by the Matthew Taylor, the chief executive of the RSA. The Review will consider six themes, one of which is in these terms: “Do current definitions of employment status need to be updated to reflect new forms of working created by emerging business models, such as on-demand platforms?”

Watch This Space!

[1] Per Lord Templeman Street v Mountford [1985] 1 AC 809 at page 819 letter f.