Uber Drivers Are Workers, NOT Independent Contractors

The Court of Appeal has upheld, by a majority, both the EAT’s and ET’s decisions that two Uber drivers are workers. The drivers brought test cases against the company and as workers are therefore entitled to holiday pay and to be paid at least the National Minimum Wage while working. However, this is not the final word as it is reported that Uber has been granted permission to appeal to the Supreme Court.

The Background

In UK law, having ‘worker’ status is a passport to a range of employment rights such as the national minimum wage, holiday pay and access to a pension scheme, although the full array of employment rights, including statutory sick pay and protection against unfair dismissal, is reserved for the narrower category of workers commonly referred to as ‘employees’.

For a non-employee to qualify for worker status there will usually have to be a contract between the individual and the ‘employer’ under which the individual undertakes to do work personally, and the ‘employer’ must not be a client or customer of a business operated by the individual.

Court of Appeal Decision

The Court of Appeal decided that the ET was entitled to find that the drivers had worker status. In particular, it found that the ET/EAT were entitled to hold that:

  • the drivers were incorporated into Uber’s taxi business and subject to its control and to reject Uber’s argument that drivers were working in business on their own account in a direct contractual relationship with the passenger each time they accepted a trip
  • a driver could be working for Uber as a ‘worker’ when in the territory in which they were authorised to work, with the app switched on and able and willing to accept trips – although whether drivers were workers in between accepting assignments was a matter of fact and degree.

The majority of the Court attached particular importance to previous case law (known as ‘Autoclenz’ ) which requires tribunals to “be realistic and worldly wise” when considering whether the true terms of a written contract reflect the practical reality of the parties’ relationship. Where the contract or other documentation generated by the employer do not reflect reality, the court may disregard those terms when deciding ‘worker’ status. In this case, the Court found “a high degree of fiction in the wording” of Uber’s contractual documents. In contrast, the dissenting judge disagreed with their approach to applying Autoclenz case law, stating that the relationship argued for by Uber was neither unrealistic nor artificial and, therefore, there was no warrant for disregarding the terms of the contractual documentation. This difference will no doubt form the substance of the Supreme Court application to appeal in due course.

Comments

This is another significant decision in favour of workers in the gig economy, coming on the heels of a number of similar courier and driver tribunal decisions. Those gig employers exercising close control of gig staff through Apps should, in particular, be aware that case law has found for ‘worker’ status in such circumstances, unless a genuine right to substitute operates.

However, the Court in this decision was split, meaning that success in the Supreme Court would be far from guaranteed. In addition, it is worth reiterating that all these status cases are fact specific. Just because this appeal went in favour of the Uber claimants does not mean that cases brought by others who work in the on-demand economy will inevitably meet with the same success.

Other businesses which rely heavily on ‘on demand’ freelance workers should conduct a review to assess the potential risks of misclassifying the status of their workforce, including the affordability and practicability of paying statutory minimum wage, pension auto-enrolment and holiday pay entitlements, as applicable. In addition, those businesses should assess the impact of the Government’s Good Work plan (see our briefing) published this week. In particular, the Government’s intention to legislate to improve the clarity of the current status tests, potentially placing more emphasis on control and less on the right to substitution when deciding in favour of worker status, as well as ramping up state enforcement (e.g. HMRC) of holiday pay entitlements.

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