In a landmark ruling last week, the Employment Tribunal examined the relationship between Uber and its drivers and found that they were not self-employed contractors as the popular ride-sharing company claimed but rather that they come within the legal definition of “workers” and are protected under the Working Time Regulations, the National Minimum Wage Act and the whistleblowing provisions of the Employment Rights Act.

Although Uber has already confirmed its intention to appeal this decision, this is an important decision in the context of the modern “gig” economy where many choose to earn, or supplement, their income via online platforms such as Uber, BlaBlaCar and AirBnb.

Identifying a worker from an independent contractor

The term “worker” is defined in section 230 of the Employment Rights Act 1996 and includes both employees as well as a broader group of people who personally provide or perform work or services for another party under a contract.

A worker is differentiated from an employee, who must be employed under an employment contract, and also from a self-employed business person who provides their services as part of their own independent business. Employment tribunals look at a number of factors to determine if individuals are workers or self-employed, including:

  • the ability of an individual to sub-contract their work;
  •  the degree of control exercised by the “employer”; and
  •  the level of financial risk taken by the individual.

The Uber Factor – looking at the facts

Uber argued that its drivers are self-employed individuals who use the platform to offer their services and connect with potential passengers. The Tribunal strongly rejected this argument finding the idea that Uber in London is a mosaic of 30,000 small business linked by a common platform to be “faintly ridiculous”.

The Tribunal accepted that the drivers can choose when to log onto the app to get work and that a dormant driver who never logged on could not be considered to be a worker. It decided, however, that a worker contract is established every time a driver has the app switched on, is within the territory in which s/he is authorised to work and is able and willing to accept assignments.

Employers should note that the Tribunal showed contempt for the efforts Uber had made to avoid any finding that the drivers were workers. This includes its practice of generating an invoice between the driver and the passenger after each trip which was seemingly an attempt to show that the drivers were really providing services directly to the customers as part of their own business. The invoices are, however, never sent to the passengers.

The Tribunal highlighted a number of factors which determined that the drivers were workers who could not be regarded as operating their own business, including:

  • Uber interviews and recruits its drivers;
  • Uber fixes the fare and sets the default route for each trip;
  • Uber’s rating system was found to be a form of performance/disciplinary procedure; and
  • Uber handles passenger complaints.

It is important to note that the Tribunal stated that it is possible for businesses such as Uber to create a model whereby the drivers are in fact independent contractors and not workers but that the model chosen by Uber does not achieve this aim.

Worker status – what does this mean for the drivers?

The Employment Tribunal’s decision means that, for the time being at least, Uber drivers (and other individuals working under similar arrangements) will be entitled to employment rights such as:

  • National minimum wage (currently £7.20 per hour for over 25s);
  •  Statutory sick pay (currently £88.45 per week);
  •  A maximum 48 hour average working week;
  • Daily and weekly rest breaks; and
  • Whistleblower protection.

Workers do not, however, have the same additional rights given to employees such as an entitlement to receive statutory redundancy payments or protection against unfair dismissal.

Only a starting point

This was a test case brought by two drivers backed by the GMB union. Uber has already confirmed its plans to appeal the decision – a procedure which will be eagerly followed by employment lawyers and the 40,000 Uber drivers in the UK alone. In the meantime however, Uber drivers should proceed on the basis that they are workers and look to enforce the rights and protections afforded to them by this status.

For further advice or information please contact a member of the Teacher Stern employment department.