Taking Uber for a ride: tribunal gives Uber drivers worker status14 Nov 2016
Hot on the heels of the ASOS worker’s scandal, app-based car hire company Uber has come under fire following a Tribunal decision which entitles their drivers to holiday and sick pay, among other worker’s rights. With over 40,000 Uber drivers in the UK, the decision is bound to create controversy, but what have the Tribunal actually said and what does this mean for employers?
Employee, worker, contractor – what’s the difference?
Before the Tribunal’s judgment, Uber classified its drivers as self-employed contractors. This meant that Uber didn’t have to provide holiday pay, sick pay, pension contributions, and a whole host of other employment rights. Now that the tribunal has determined that the drivers are actually workers, they will be entitled to receive rest breaks and the National Living and Minimum Wage, as well as holiday and sick pay. However, they do not have the right to bring dismissal claims against Uber – this is a right reserved only for employees (as opposed to workers or contractors), who have more employment rights out of these three categories.
As the name implies, self-employed contractors do not have employers, and are free to choose when they work, and – crucially, for Uber – the conditions they work under. Although the drivers can choose their working hours, they claimed that the level of control that Uber had over their working conditions meant that they should be considered workers, not contractors. Uber argued that the requirements imposed on the drivers were only in place so that both parties could meet their ‘common interest’ of excellent customer service, and that this didn’t amount to an excessive level of control. The cab company claimed that it was simply a link between passengers and self-employed drivers – though Uber was not very clear on why they need to decide how much the passengers pay the ‘self-employed’ drivers.
The Tribunal’s decision
The Tribunal were not impressed with Uber’s attempts to dodge their obligations, and delivered a scathing judgment. The judgement went into detail on the Tribunal’s criticisms of Uber’s defence, but the main focus was on Uber’s public perception, the level of control over the drivers, and the contracts between the drivers and Uber.
In the past, Uber has publicly associated itself with its drivers in the same way an employer would. The Tribunal cited several examples, and among the most telling was the boast that Uber had “created tens of thousands of jobs in the UK”, and Uber’s use of “we” and “us” when referring to the drivers. When booking a car, passengers are given the impression that their driver is part of Uber’s service, unless they (or their lawyers) read the small print on the Uber app. Uber also has a range of cars available (for a higher price, passengers can hire luxury or wheelchair-access cars), and the marketing of the product range was clearly for Uber’s own benefit rather than that of the ‘self-employed’ drivers.
In addition to controlling the public perception of their drivers, the Tribunal also thought it was important that Uber exercised considerable control over the drivers while they were working. Uber has a specific recruitment process, controls how much information drivers receive about their passengers and destinations, sets the drivers’ fares, and has a system of penalties in place for drivers who fail to accept a certain number of trips, ultimately ending in ‘de-activation’ (i.e. dismissal). The drivers have no power to increase their fares, though they could lower the price if necessary – but the reduction would be reflected in their pay.
Although the contracts between Uber and the drivers state that the drivers are self-employed, the Tribunal found that this didn’t reflect reality. During the course of the claim, Uber tried to argue that they were simply a ‘platform’ for passengers to find available drivers, which in turn would mean that the drivers have individual contracts with each of their passengers. The Tribunal rejected the idea that each of the 40,000 drivers were a business in themselves as “faintly ridiculous”, especially since Uber controlled all of the details given to the drivers about their passengers.
Implications for employers
The business model of instructing a large, self-employed workforce to provide services to customers or clients (known as the ‘gig economy’) has been taken on by many businesses in the UK. Unless the decision is overturned, it could have a huge impact on the way these businesses operate. Companies will need to make sure that their contract reflect the actual working relationship between their organisation and anyone working on their behalf, or they risk facing similar claims. The cost of paying National Living and Minimum Wage, sick pay, holiday pay, and other benefits to workers could take a heavy toll, especially on small businesses using this model. Four courier firms, including Addison Lee and CitySprint, are already facing similar actions from contractors who want to enforce employment rights. Another possible outcome is an increase in Uber’s fares – the most obvious way of recovering any increased payments is to push up their prices.
However, it’s important to note that Uber are appealing the Tribunal’s judgment, so the legal decision on the drivers’ status isn’t final yet. The decision is a first instance decision and so is not binding in other tribunals. The more immediate impact of the case is also worth clarifying. The trade union GMB has claimed that the judgement will allow all Uber drivers to “enjoy the same rights as employees”, while Uber has told their remaining drivers that the decision only affects the two individuals named in the judgement (which led to further bad press amid claims of ‘misleading’ their drivers). The actual position is somewhere between these two statements. The judgement changes the legal status of the drivers, and means that they have the same rights as workers, not employees. If the decision is not overturned, Uber drivers will have the right to bring claims for any breach of worker’s rights. However, Uber will not be required to pay out 40,000 workers’ worth of backdated pay unless all of their drivers take legal action or Uber give way and agree a deal with the drivers. The reminder for businesses is that tribunals have never been blinded by the label printed on the front of a contract. It’s important to get contracts in place – it’s more important to match the right contract with the reality of the relationship.