Uber's defeat at employment tribunal made the headlines this month – but what does it mean for employment status and is it a harbinger of change in workforce law and practice?

Worker status

It is widely known that there are several species of 'employment' status.

  • A worker, as defined in section 230(3) of the ERA 1996 – where an individual is engaged under a contract to personally do work, but is not operating under a business / client relationship.
  • A self-employed contractor: usually an individual who is not an employee and does not fall within the description above.
  • An employee, defined in section 230(1) of the ERA 1996 as an individual who has entered into or works under a contract of employment – whether express or implied.

The question of employment status is a matter of looking at the reality of the working relationship, and it is open to an employment disregard the 'label' that the parties might have applied to their relationship in the any documentation. This was famously summarised by Lord Templeman in a case called Street v Mountford:

"[t]he manufacturer of a five pronged implement for manual digging results in a fork even if the manufacturer…insists that he intended to make and has made a spade."

In the employment tribunal litigation brought by Uber drivers, the claimants argued that Uber (to use Lord Templeman's metaphor) was attempting to call a five pronged implement a spade, in that it categorised its drivers as self-employed contractors, operating individual small 'businesses' via an online app.

The Uber model of work

For those who are not familiar with how this system works, Uber has created a smartphone app, whereby customers order a taxi and pay a fare to Uber.  Registered drivers are not committed to work any set hours, but they can sign in to the app, and accept a booking as and when they wish. The drivers supply their own vehicles and licences, but the Uber app places the driver in direct contact with the customer who has ordered the taxi. The driver has to use the route designated by the app, unless the customer requests a different route. Payment is made by the customer to Uber and Uber then pays the driver at the end of the week, having deducted a 'service fee' for use of the app.    

Uber operates a rating system for drivers, which can result in access to the Uber app being withdrawn and Uber takes the risk in some matters including, for example, some instances of fraud by passengers. Uber also deals with any fare complaints, often without requesting any comment from the driver.

What is the employment status of 'Uberization'?

The employment tribunal stopped short of finding that the Uber drivers were employees but held that they are workers while they are working under the app.  The significance of this is that, whilst the drivers would not be entitled to the full range of employment rights, they would be entitled to certain limited rights, including the right to be paid the national minimum wage, entitlement to paid holiday and rest breaks and the right not to be discriminated against. 

The employment tribunal gave short shrift to the argument that this way of working is just using a 'technology platform' – similar to other technology platforms, such as Ebay. The tribunal said that the notion that Uber in London worked as a mosaic of 30,000 small businesses linked by a common platform was "faintly ridiculous".

The tribunal also noted that Uber had gone to remarkable lengths to conceal the nature of its agreements with its description of the legal relationships. The tribunal referred to "fictions" and "twisted language" in the contractual documentation; getting quite lyrical, the tribunal said of Uber's witness "the lady doth protest too much, methinks" (quoting Shakespeare's, Hamlet).  

What does this mean for the future of work?

Although this decision is only at employment tribunal level, and therefore does not create a binding authority, it has been eagerly awaited as the 'employment case of the year' and may herald the start of a new era for the law of employment status. 

New models of work are emerging as technology has enabled huge growth in the 'gig economy', whereby individuals may offer their services on an ad hoc basis through various online platforms.  As this trend grows, we may find that the old classifications of 'worker / employee / self-employed contractor' are strained, as ways of working develop that could not even have been dreamed of when the original legislation and case law laying down these concepts was developed.

Uber have confirmed that they intend to appeal this decision, so this is unlikely to be the last that we have heard on this point. But it is interesting to note that the tribunal did highlight that it would have been possible for Uber to have designed a model of working that would have achieved self-employed status for its drivers. The tribunal did not specify how this would work but, presumably, it wold involve Uber taking more of a back seat in terms of its control of the relationship between customer and driver, e.g. allowing customers to pay the driver direct and not specifying routes.

In recent months there has been a great deal of comment on the social and legal policy implications of the development of the 'gig economy' – like zero hours work, this lacks a precise legal definition but generally refers to individuals who pick and choose to offer their services through online media. It remains to be seen whether existing legislation and protections, which pre-date these models, will remain fit for purpose.

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