Uber Ruling and the Impact on the “Gig-Economy”

The recent case of Aslam and Farrar v Uber has attracted significant interest from the media and is likely to have far-reaching effects for the growing ‘gig economy’ in the UK.  The case centred on whether Uber drivers are self employed contractors or are in fact “workers” with rights to paid annual leave, national minimum wage, sick pay and other rights.

Background

A “worker” is a person who has entered into a contract with a third party to personally do work for or provide services to that third party.  This differs from a situation where the third party is a customer of the individual’s business undertaking, in which case they are self-employed.

In order to establish the appropriate status, courts typically look at the level of control the business exerts over the individual.  Self-employed workers would typically have a certain level of autonomy whereas workers are more constrained.  The actual terms and conditions within the contract are not necessarily determinative, and the courts will focus on what the actual arrangement is in preference to what it may say in the contract.

Uber is an online transportation network company which allows its users to submit a trip request via the Uber “app”.  This is then relayed to the nearest Uber driver who has can then accept the request and pick up the customer.

The Position of Uber

Uber claimed that the arrangements in place with its drivers did not have the required level of control necessary for them to be classed as workers.  They drew attention to the following factors:

• The Uber app they provide is a mere “platform” linking fare paying customers to Uber drivers.
• Each individual driver uses their own vehicle.  They are responsible for the costs of maintaining the vehicle and all other expenses.
• Drivers are not required to work and there is no performance management (although customers can “rate” drivers at the end of the journey).  Drivers are not subject to disciplinary procedures.
• Uber do not pay the drivers; rather they collect the fare from customers and pass this on to the drivers after commission has been deducted.  In this way, they act merely as a payment collections agency.
• The drivers are free to accept work from other companies, including direct rivals.
• The drivers accept that they are self-employed for tax purposes

The Decision of the Employment Tribunal

The tribunal found that Uber’s perspective did not reflect the reality of the situation and it was not persuaded by the arguments they put forward. In ruling that the individuals were workers, the tribunal drew attention to the following key factors:

• Uber interviews and recruits the drivers.
• The drivers have no say in the terms of their engagement and must agree to Uber’s terms. 
• Uber fixes the terms with the passengers, including the fare.  All terms are pre-determined and the driver has no influence on them.
• Uber sets the default route for the driver to follow.
• All details of the passengers are held by Uber and are not shared with the driver, except for the first name of the lead passenger.
• Uber deals with customer complaints and frequently compensates customers where appropriate. The findings are not always shared with the driver in question.
• Uber accepts liability for losses, for example in cases where customers commit fraud.This would normally fall on a self-employed worker.
• Uber does in fact pay the drivers.
• The rating system used by Uber is essentially a performance management tool.  Drivers who have poor reviews can be refused further business.

In short, the drivers are an essential part of Uber’s business model and they dictate how they operate to a significant degree.  This element of control is what makes them workers rather than self-employed contractors in the eyes of the tribunal.

Next Steps

Uber has made it clear that it intends to appeal the decision.  However, it is not clear at this stage what the grounds of appeal may be.

Wider Effects on the Gig Economy

Although each individual case turns on its facts, Uber’s business model is similar to many others in the growing “gig economy” who will take a keen interest in this case.  For example, Deliveroo and Hermes both claim to engage a large number of self-employed workers whose status could be found to differ from what is set out in their terms of engagement.  This case is a reminder that the courts and tribunals will look beyond the contracts and scrutinise the true relationship between the parties.