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Uber: What The Judgment Means For You

Submitted By Firm: Burness Paull

Contact(s): Ronald Mackay

Author(s):

David Morgan

Date Published: 11/1/2016

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Readers of my blog post on “The Gig Economy” last week will not have missed the breaking news on Friday that the long-awaited judgment of the Employment Tribunal in London in the claim against tech giants Uber was finally issued.  It has been dubbed the most important employment law case of the year.

The claim was brought by the GMB union as a test case on behalf of a number of Uber drivers in London.  Similar litigation in San Francisco had been settled by the global company for multi-million dollars.  An entry level Employment Tribunal decision is not binding on future tribunals in the UK until it is appealed, but it made for very interesting reading.

In short, the Employment Tribunal resoundingly found in favour of the drivers and held that they were “workers” at law, and not self-employed independent contractors as their contracts said and Uber had tried to persuade the tribunal.  Drawing from Shakespeare, the Judge said of Uber that it was a case of “the lady doth protest too much, methinks”.

The Tribunal rejected Uber’s submissions that it is simply a technology platform as opposed to a transport provider and that its drivers are self-employed contractors offering their services to passengers via the app. In the tribunal’s view, any driver who has the app switched on, is within the territory in which he or she is authorised to work, and is able and willing to accept assignments is working for Uber under a worker contract.

The tribunal also drew guidance from the findings of the North California District Court, in a similar case brought by Uber drivers, that ‘Uber does not simply sell software; it sells rides.’

The tribunal highlighted that Uber runs a business whose central function is the carrying of people in cars from one point to another and that it operates through a company that is regulated as a private hire vehicle operator.  However, the tribunal considered that the ‘remarkable lengths’ to which Uber had gone to compel agreement with its legal analysis merited ‘a degree of scepticism’. The tribunal noted that in other correspondence, for example to the Greater London Authority Transport Scrutiny Committee, Uber had boasted of providing job opportunities and potentially generating tens of thousands of jobs in the UK and paying its drivers on a commission basis. In the tribunal’s view, the case put forward by Uber did not correspond with the practical reality of the situation.

In emotive language, the Tribunal decided that the notion that Uber in London was a mosaic of 30,000 small businesses linked by a common platform was ‘faintly ridiculous’. Apart from a few individuals who operate more than one vehicle on their Uber account, each such business consisted of an individual with a car seeking to make a living by driving it.

In relation to the key issue of the nature of the relationship between Uber and its drivers, the tribunal noted in particular that: Uber interviews and recruits drivers; Uber controls key information as to the passenger’s identity and intended destination and does not share this with drivers; Uber requires drivers to accept and/or not to cancel trips and enforces this by logging off drivers who breach it; Uber sets the default route for each trip and the driver may face deductions from his fare if he departs from it; Uber fixes the fare and the driver cannot agree a higher sum with the passenger; Uber imposes conditions on drivers, instructing them on how to do their work and controlling them in the performance of their duties; Uber subjects drivers through its rating system to what is effectively a performance management/disciplinary procedure; Uber accepts the risk of loss, for example where a passenger soils a vehicle; and Uber handles passenger complaints.

This will almost certainly not be the final word in this test case, as shortly after the Tribunal judgment was issued, Uber issued an email statement to its customers (reportedly some two million passengers are registered as users of the app in London alone) confirming that it will be seeking to appeal the decision.

As Uber put it in their post-Tribunal statement: “A recent poll of 1,000 drivers who use our app found that the overwhelming majority prefer being self-employed and joined Uber precisely because they want to be their own boss. Drivers want the freedom to decide where, when and for how long to drive: being classified as workers could deprive them of the personal flexibility they value.”

If you happen to be an Uber driver, there is much for you to learn from this judgment.  Bloggers have been quick to offer their advice to drivers on how they might draw from this case in their use of the Uber tech platform to bolster their prospects of being found to be a worker.

But, is there anything that we as employers and those who advise them on the HR side can learn from this judgment?   The crux of the Uber case surrounds the blurring of the boundaries between employees or workers on the one hand and truly self-employment independent contractors on the other.  The hype is that it’s the first major case to address these issues in the “gig economy”.  But, as I wrote in my earlier post, we have had to advise on the vexed issue of employment status for many years - applying the traditional tests of “subordination”, control and “mutuality of obligation”.  Tests that I contend are no longer fit for purpose.

Uber is the latest in the line of authorities on this subject.  The dilemma of this categorisation sets the stage for their legal rights – whether that is to unfair dismissal protection, national minimum wage, holidays or sick pay.

Maybe I can answer it simply with a take on the old saying “if it looks like a duck, and it quacks like a duck...then it’s a duck”. So, if the individual looks like a worker...and acts like a worker...is he not a worker?  Certainly the courts have been determined to look behind the language of even the most tightly drafted contracts for independent contractors to find that the individual is truly an employee, or at least a worker, when you scratch beneath the surface and look at the practical reality of the working relationship.  This was pronounced in Uber’s case, which found itself on the receiving end of a scathing assessment by the Tribunal that the drivers were, in practice, workers despite the contracts that were designed to say otherwise.

Other tech businesses that rely on flexible short-term labour in the gig economy will be monitoring this case carefully.  But for all employers that rely on independent contractors, ‘casuals’ or freelancers to supplement their headcount, this case is another cautionary reminder to audit and sense check the status and length of service of such individuals to consider whether their contractual status accurately reflects the status quo of the services they provide.

After all, you can take a duck to water...but you can’t make it quack!

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