Today, Her Honour Judge Eady QC, who heard the appeal, handed down her Judgment upholding the Employment Tribunal’s judgment and dismissing Uber’s appeal.
Uber is described as a modern business phenomenon, providing transportation services to two million passengers in the UK through its smartphone app.
The contractual documentation Uber has in place characterises the drivers as self-employed independent contractors. However, the Employment Tribunal critically assessed the relationship between Uber and its drivers and found that, in practice, the contracts did not reflect the reality of the relationship. The Tribunal found that the following features of the relationship pointed towards “worker” status:
- A passenger’s request is received by Uber and is then passed on to the nearest available driver who has 10 seconds to accept the trip (otherwise the request is re-allocated).
- The driver is only provided with the first name and rating of the passenger and is prohibited from sharing contact details with the passenger.
- The driver is unaware of the destination until they have accepted the trip and pick up the passenger.
- Although the driver is not bound to follow the route set by the Uber app, they may face adverse consequences if they do not.
- The fare is calculated by Uber, but it is open to drivers to agree a lesser sum with passengers. The passenger pays the fare to Uber and payment to drivers is made by Uber.
- Drivers have an obligation to accept work as they would be forcibly logged off the App if they decline three trips in a row. Furthermore, cancellations would amount to a breach of the agreement between the driver and Uber unless there is a “good reason” for cancelling.
In light of its findings, the Employment Tribunal rejected Uber’s assertion that it was a technology company and not in the business of providing transportation services. The Tribunal rejected Uber’s contention that drivers might “grow” their businesses other than by spending longer hours at the wheel and concluded that any supposed contract between the driver and passenger was a “pure fiction”. The Tribunal found that the written terms on which Uber relied did not correspond with the reality and it was therefore able to disregard them. It held that the drivers were “workers” as they personally undertook work for Uber as part of its business of providing transportation services to passengers in London.
In its appeal, Uber contended it was simply acting as agent; the app was a piece of technology putting drivers in touch with passengers and the written agreements made clear that drivers provided transportation services to passengers. Uber submitted that those written agreements should not be ignored because of the inequality of bargaining power between Uber and the drivers.
Furthermore, it was argued that Uber was operating in the same way as traditional mini-cab companies and the regulatory requirements (including accepting and declining bookings, checking drivers’ documents, fixing the fare and handling passenger complaints) were essentially irrelevant to the characterisation of the relationship.
The Claimants submitted that there was no written document in which the driver had appointed Uber London Ltd as their agent. The factors arising from the regulatory regime were not irrelevant (for example, the personal service requirement) and were part of the factual matrix. As it was inherent in Uber’s case that the written contractual documentation did not provide the complete picture, it had to be for the Tribunal to determine the correct status, taking into account all facts and circumstances.
The Claimants argued that, in any event, Uber gave direction and control beyond the conditions dictated by the regulatory requirements – for example Uber’s complaints investigation and adjudication and their prohibition on drivers contacting passengers.
The EAT held that the Employment Tribunal, having found that Uber drivers did not operate businesses on their own account (and therefore did not enter into contracts with passengers), was entitled to reject the label of agency and the characterisation of the relationship in the written documentation.
With regard to the regulatory requirements, the EAT found that this formed part of the relevant background; although personal service was a regulatory requirement, it was also a relevant matter in determining worker status. As such, the Tribunal was not obliged to disregard such a factor and it was “all part of the factual matrix” for the Tribunal to assess.
The Tribunal’s findings on control were not limited to matters arising as a result of the regulatory requirements. For example, there was no regulatory requirement for Uber to (i) carry out the interview and induction process (“onboarding”), (ii) stop the driver and passenger exchanging details, (iii) resolve passenger complaints without recourse to the drivers, (iv) operate a rating system, (v) log drivers off if they decline three trips in a row or (vi) provide a suggested route for each trip. The EAT commented that these were controls introduced by Uber “at its choice”.
In relation to mutuality of obligation, the EAT held that although there was no obligation on drivers to accept all trips, nor an inability to cancel a job, a driver would be forcibly logged out of the app if they did not accept three trips in a row and would receive a warning if they cancelled a job as it amounted to a breach of the agreement. As such, by requiring drivers to be able and willing to accept assignments, it must follow that switching on the app gives rise to an obligation.
(ii) Working Time
The EAT agreed with the Tribunal’s findings that the drivers were working when they were “within their territory, with the app switched on, ready and willing to accept trips”. The EAT found that the three essential pre-conditions of “working time” were present, specifically: the driver must be (i) working, (ii) at his employer’s disposal, and (iii) carrying out his activity or duties.
This is a landmark decision which will have significant implications for approximately 40,000 Uber drivers and, more broadly, individuals engaged across the so-called ‘gig economy’.
The mischaracterisation of workers can have very serious implications. Subject to any appeal, the financial implications for Uber (who are likely to face back-dated claims from tens of thousands of drivers) will be very substantial indeed.
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This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.
All content on this page is correct as of November 10, 2017.