The Court of Appeal recently confirmed in a long-running case that Uber drivers are ‘workers’ for the purpose of employment legislation. This case has received a lot of media attention given Uber’s high profile and the questions at the heart of it are of great importance, especially to the so called ‘gig economy’. This being markets characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs. In the UK it’s estimated that five million people are employed in this type of capacity, with typical jobs including couriers and ride-hailing drivers.
Many gig economy businesses have engaged individuals as self-employed contractors, who can choose to accept work or reject it. However, there has been a recent trend in employment status cases for gig economy individuals to successfully challenge their employment status as independent contractors arguing they should be categorised as ‘workers’ and therefore have increased statutory rights at work. These cases also have wider implications for individuals outside the gig economy whose employment status is not clear.
Uber holds its drivers out to be self-employed individuals who choose when they want to work thus benefiting from its modern business model. On behalf of Mr Aslam and Mr Farrar, two ‘test claimants’ representing Uber drivers, it was argued that the drivers are actually employed by Uber as ‘workers’ rather than being independent contractors (self-employed).
On 19 December 2018 the Court of Appeal upheld an Employment Tribunal’s earlier ruling that Mr Aslam and Mr Farrar are workers and therefore entitled to a limited number of employment rights that apply to this status in employment legislation, including:
- Protection against unlawful deductions from wages;
- Entitlement to the national minimum wage; and
- Entitlement to paid annual leave.
A worker is defined under section s230(3) of the Employment Rights Act 1996 as “an individual who has entered into or works under:
- A contract of employment; or
- 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 any party to the contract whose status is not by virtue of the contract that of a client or a customer of any profession or business undertaking carried on by the individual.”
The Uber judgement confirmed when considering an individual’s employment status, a tribunal will look at the reality of the working relationship and may disregard how the parties may have categorised the relationship in contractual documentation.
The Uber decision focused on whether as argued by Uber and reflected in its written contractual documentation, its role is limited to acting as an intermediary, providing booking and payment services. So, the drivers contract directly with passengers and work as self-employed, independent contractors. Or, if instead in reality Uber runs a taxi service business through which drivers are employed as workers to deliver its services. The Court of Appeal found that the factual evidence supported this latter conclusion. Also, the written documentation did not reflect the reality of the relationship between the parties and could therefore be disregarded.
It seems inevitable this case will go onto be finally decided by the Supreme Court. The Court of Appeal having given Uber permission to appeal. This case has significant implications for the gig economy and a final decision will be awaited with interest.
The judgment of the Court of Appeal included notable comments by Lord Justice Underhill who did not agree with the majority decision that the Uber drivers were workers. He stated if the current legislation does not go far enough to ensure that individuals working in the gig economy enjoy the same rights and protections as other persons then Parliament should amend the legislation. Reference was made to the government’s response to the Taylor Review (a government commissioned review of modern working practices) and, in particular, a recent consultation on employment status.
It would be beneficial for employers and individuals to have greater clarity through legislation on employment status. But, with reference the government’s very recently published “Good Work Plan” in response to the Taylor Review a clear plan of action to clarify this vexed issue seems to be on the backburner for the time being. The government has said it will “legislate to improve the clarity of the employment status test, reflecting the reality of modern working relationships”. But, it has little to say about how it would achieve this. So, in the meantime we remain reliant on less certain guidance from case law whereby decisions may vary depending on the facts of an individual case.
Laura McFadyen is a partner in our employment team in Exeter and specialises in HR and employment law. To discuss the content in this article or any other employment issue please call 01392 210700 or email firstname.lastname@example.org.