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The decision in the Uber case and understanding employment status

24th November 2016

The Employment Tribunal has recently given its decision in a case involving Uber drivers. The case is important, as it provides a view from the Employment Tribunal on the legal status of people working in the diverse range of relationships that have developed in recent years with the "gig"economy. The decision is also important in view of the legal arrangements between a large number of businesses that engage services from people ostensibly on a self-employed basis.

Uber runs an organisation whose main function is to carry people in cars from one point to another, and it operates in part through a company that is regulated as a private hire vehicle operator. Uber argued that they operate not as an employer of the drivers, but that the drivers agree to act as self-employed individuals, linked by a common work provider- Uber- which operates through an the Uber App. Uber argued that the drivers worked directly for the customer and that the Uber App simply facilitate that work. They claimed that they were not providing work for Uber as such.

In the case, Aslam &others v Uber BV & others a number of drivers that use the Uber App have brought claims that depend on them being able to demonstrate that they are not in fact genuinely self-employed. Uber argued that all the drivers are self-employed, and hence not entitled to holiday pay or the National Minimum Wage from Uber, and various other rights. There are significant financial implications for Uber, as they used the services of some 30,000 drivers in London, and elsewhere.

The case highlighted the complicated nature of the legal labels used for different working relationships, and the different rights and responsibilities that apply to each type of relationship. The greatest level of legal protection is given to people that work as "employees"; the next level down is the mid-way status of "worker", and the lowest level is for those that are genuinely "self-employed". Uber argued that the drivers were self-employed.

The Employment Tribunal held  that the drivers were "workers", and were neither employees nor genuinely self-employed.

The status of "worker" is one that has caused problems for many businesses. Being a worker is different from being an employee. For example employees are protected against unfair dismissal, have rights to statutory redundancy payments, rights to maternity leave, rights to request flexible working arrangements etc. In order to be an employee an individual must be engaged on a contract of employment (the full details of which do not have to be in writing!). In order to determine if a person is an employee the Tribunals will look at a range of factors, but really will focus on the question of the level of control of the activities by the employer. Employees are also obliged to do the work provided by their employer. A "worker" has a right to be paid at least the National Minimum Wage, the right to holiday pay, an entitlement to rest breaks, but is not entitled to maternity leave or statutory sick pay, or protection from unfair dismissal.

Essentially three questions have to be asked to determine if an individual is a "worker":-1. Does the individual provide work under a contract, 2. Is that contract one in which they must personally provide work for the other party, and 3. Is that other party a client or customer of any profession or business undertaking being carried out by the individual.

In order to be a "worker" the answer to the first two questions has to be "yes" and the answer to the third must be "no".  

Uber are by no means unique in having in place an arrangement in which they stress that the individual is self-employed. So the approach adopted by the Employment Tribunal in this case is an important guide for other businesses in understanding how the Tribunals will examine the status of the people that work in similar arrangements.

The Tribunal noted that there was a contract between Uber and each individual driver. The Tribunal noted that when the individual turned on their Uber App they were then working under a contract with Uber. Uber, on the contrary, argued that the drivers were working directly for each customer, and that their App simply facilitated that work. They asserted that they were not providing work for Uber , and that they were simply a "platform" that allowed drivers and customers to meet and trade. Uber referred to a couple of cases in which the venue was provided by a business, but individuals provided their own work at those venues that was ancillary to the main business.

It argued that the drivers in this case were in a similar situation to the service providers in those other cases. Uber's arguments came unstuck when the Employment Tribunal considered the practical reality of their operation and their dealings with the drivers.  Uber's assertion was that each driver and customer entered into a contract with each other to provide a transportation service. However, in reality this was untenable because the parties had never met before the service was conducted, the route was set by Uber and the price was calculated by Uber and paid to Uber. In addition Uber's own app made it clear that the customer was booking a ride with one of "their" drivers, and that Uber was quite fussy over who to use as drivers and the kind of car they drove. The drivers were free to decide if they accepted any particular ride, but were in reality discouraged from rejecting them. Uber use a rating system for the customers, who are invited to rate the work done by the drivers. The Tribunal noted that this was effectively a performance management/ disciplinary tool. In addition Uber handled any passenger complaints.

So, the Employment Tribunal concluded that Uber were not simply giving customers an opportunity of finding drivers who happened to be in the area and available for hire. It committed to giving an excellent ride experience and undertook to provide that service to its customers- and does that by allocating a driver to them.

The Tribunal noted that  simply describing yourself as a software company  or a trading platform will not be enough to convince the Tribunal that the business is not in fact engaging the drivers as "workers".

The case should highlight to businesses the need to examine the details of the arrangements that they have with individuals that provide work to them, in order to ascertain if they are actually "workers" or are genuinely self-employed. The case also highlights the conflict that businesses have in the desire to limit employment law liability to those that work for them, while still exercising a sufficient degree of control over the services that those individuals provide for them. 

The decision of the Employment Tribunal is likely to be appealed to the higher courts, so there will probably be more to report on this in the future.

At Hallett Employment Law Services Ltd we can help you review your contractual arrangements and working arrangements to help you address issues over the legal status of your workers and contractors. Similarly if you work under an arrangement similar to that described in this case, we can advise you on the range of rights and your true legal status- and how to address this.                 

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