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Uber Appeal Fails: what next for Uber?

November 2017

Introduction

The Employment Appeal Tribunal has handed down its judgement in Uber’s appeal against last summer's finding in the Employment Tribunal that its drivers are workers. This is the latest victory for those campaigning to ensure that workers in the so-called gig economy have access to a basic level of statutory rights, rather than being treated as being in business on their own account.

There are approximately 30,000 Uber drivers in London.  Uber has sought to argue that it is no more than a software provider, enabling drivers to find passengers, and then mediating between them.  Uber does not pay the drivers in any traditional sense, instead deducting a 25% service fee from each fare it records on the driver's behalf.  It describes itself as being the drivers’ agent.

This model was challenged by several drivers, who sought to argue that they are workers engaged by Uber. Whilst worker status does not give access to full employment rights it - most significantly - gives an entitlement to receive at least the National Minimum Wage, and to paid leave under the Working Time Regulations.

The Employment Tribunal judgement

Uber failed in its defence to these claims before the Croydon Employment Tribunal. The Tribunal was highly critical of Uber's attempts to characterise itself as no more than the drivers’ agent.  In a lengthy, highly detailed, judgement, the Tribunal described the working arrangements in place for Uber drivers, and why this should be regarded as an employer/worker arrangement.  The tribunal gave short shrift to Uber’s protestations that the extensive contractual documentation in place supported Uber’s analysis of the legal relationships in place. Following a Supreme Court judgement (Autoclenz) the Tribunal found that the contractual documentation did not reflect the reality of the parties’ arrangements, and so was prepared to substitute its own view of the true nature of that arrangement. This gave the drivers an entitlement to holiday pay and the National Minimum Wage.

The Employment Appeal Tribunal Judgement

Uber’s appeal to the Employment Appeal Tribunal (EAT) was held in September. The EAT has just handed down its judgement. That judgement upholds the judgement of the Employment Tribunal and dismisses Uber’s appeal in its entirety.

Uber’s primary argument before the EAT was that the Tribunal had wrongly disregarded the basic principles of agency law which is what (it contended) were set out in the documentation between Uber, the drivers, and passengers.  Uber continued to argue that, given the fact that the documentation was inconsistent with there being a worker relationship, the Employment Tribunal had wrongly decided against them.

In coming to its conclusion, the EAT held that the Employment Tribunal had been correct in its concern to discover the true nature of the relationships between the parties.  In doing so they relied upon the long held principle that, in employment relationships, the employer always holds the best cards.  As such the relative bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed between the parties. To ascertain what has been agreed between the parties, all the circumstances of the case must be looked at, and the written agreement is only a part of that factual matrix. The EAT observed that the Employment Tribunal had made extensive findings of fact, and that these facts indicated that the drivers were engaged on a personal basis to provide their services to Uber.  The existence of this contract meant that they were properly categorised as workers.

The EAT's judgement is, in many ways, what we all expected.  There was a significant weight of evidence to support the Employment Tribunal’s findings as to the true nature of the working relationship. However, we are expecting Uber to appeal, and there are certainly grounds for doing so. The issue in this case is now very much the extent to which the courts and tribunals should be able to turn away from the written intentions of the parties (as expressed in the written contract), and instead look at the substance of the relationship.  Whilst this is a well trodden path through to the Supreme Court, there are still many aspects of it that can be argued, given the fact that UK law starts from the presumption that the parties will have intended to agree what is in writing.

A subsidiary issue, which is likely to take on a greater degree of significance before the Court of Appeal, is the duration for which Uber drivers are workers: is it just when they are driving, or is it also when they are waiting for an assignment?  The Employment Tribunal held that all time spent driving, and waiting for an assignment should be regarded as time spent working for Uber.  This is significant, particularly in the context of ascertaining whether the drivers have received the National Minimum Wage for all time spent working.  The Employment Tribunal’s finding that all time should be regarded as spent working for Uber was based primarily upon the fact that Uber had stated in their literature that drivers should accept at least 80% of all trip requests.  The Employment Appeal Tribunal accepted the Employment Tribunal’s findings on this with a degree of trepidation, and it is likely that this aspect of the case will be considered in more depth by the Court of Appeal, who could make findings that have significant implications for umbrella contracts, and the nature of working time in various different contexts. 

Conclusion

At this stage, the case adds little to our practical day-to-day lives, but confirms that the direction of travel for workers in the gig economy is towards universal recognition of their status as workers. Any business engaging individuals on a self-employed basis should be assessing whether these individuals are genuinely in business on their own account, or workers. If they are workers then they will have certain rights.  We are unlikely to get a Court of Appeal judgement before late next year, but in the meantime another case dealing with similar issues will be before the Supreme Court.  The Pimlico Plumbers case will be heard next year, and is likely to provide interesting guidance on the construction of contracts in this area, and in particular the use (or abuse) of substitution clauses, which have long been included in contractor contracts so as to move the contract more towards self-employment.  

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