Lucy Blezard, of Harrison Drury’s employment and regulatory team, looks at the significance of the decision made in Uber’s appeal against drivers’ rights to pay and holiday, and why the status of workers could have implications for all businesses.
The taxi-hailing firm Uber has become a global success story through its system that allows customers to order a taxi and pay for their fare through an app.
Uber previously treated its drivers as being self-employed. However, the Court of Appeal has, by a majority, upheld the decision that Uber drivers are ‘workers’ within the meaning of the Employment Rights Act (ERA) 1996, the National Minimum Wage Act (NMWA) 1998 and the Working Time Regulations (WTR) 1998.
The Court of Appeal also ruled that the drivers were to be regarded as working during any period when they had the Uber app switched on and were able to accept trips.
What’s the background to the Uber drivers’ dispute?
In 2016, several Uber drivers sought to challenge their worker status. They complained of unlawful deductions from wages, failures to pay national minimum wage and provide paid annual leave.
To bring any of these claims, the drivers had to be ‘workers’ within the meaning of the ERA, the NMWA and the WTR.
There is no statutory test to determine employment status for tax purposes. An individual’s employment status is therefore determined by the application of several tests established by case law.
Therefore, simply having a contract in place, may not be enough, and the Court will consider the wider picture (i.e. the conduct and performance of the parties). Individuals who are self-employed aren’t paid through PAYE and generally don’t have the employment rights and responsibilities of employees.
The written contractual terms between Uber and its drivers indicated that Uber acted only as an intermediary, providing booking and payment services, and the drivers drove the passengers as independent contractors.
What legal issues have been considered?
The Court of Appeal had to consider:
- Were the ‘Uber drivers’ workers for the purposes of the ERA, the NMWA and the WTR.
- What counted as ‘working time’ for the purposes of the WTR?
- What counted as the ‘hours worked’ for the purposes of the NMWA?
What was the Court’s decision?
The Court of Appeal considered that these terms did not reflect the practical reality of the relationships. The Court of Appeal agreed that Uber was a transportation business and that drivers provided skilled labour without which the business would not be able to deliver its services and earn profits.
The Court of Appeal also determined that the time periods which the drivers worked under counted as ‘working time’ under the WTR. The Court of Appeal agreed that the drivers were, in fact, workers for the purposes of the ERA, the NMWA and the WTR, at all times when they satisfied all of the following:
- They were in the territory in which they are authorised to drive (in this case, this was London and some surrounding areas)
- They had turned on the app and so had access
- They were ready and willing to accept fares from passengers
What does all this mean for Uber?
It goes without saying this could be a testing time for Uber, both financially and commercially, as well as this potentially placing Uber in the spotlight about the Court’s approach towards organisations operating within the so called ‘gig economy’.
Unions calculate that Uber could owe a staggering £18,000 per driver considering this matter (based on an Uber driver in London working 40 hours per week). The Court of Appeal has already granted Uber permission to appeal this decision to the Supreme Court.
What should businesses be considering?
Businesses who generate and provide work to individuals who they treat as ‘self-employed’ need to consider whether those individuals could in fact be classified as ‘workers’ under UK law, and be entitled to basic employment law rights. Not being clear on a worker’s status could potentially lead to costly proceedings for organisations.
If you would like to discuss this matter with a member of our employment and regulatory team, please contact us on 01772 258321.