Landmark judgment on worker status confirms another huge success for Bates Wells’ Employment team

In November 2017, the Employment Appeal Tribunal upheld the Employment Tribunal’s decision that the Claimants in this case, all of whom are current or former London-based Uber drivers, were “workers” and consequently entitled to basic protections such as national minimum wage and holiday pay. Uber’s appeal against this decision was heard in the Court of Appeal at the end of October 2018.

Today, Sir Terence Etherton Master of the Rolls, Lord Justice Bean, and Lord Justice Underhill VP, who heard the appeal, handed down their judgment upholding the Employment Appeal Tribunal’s judgment and dismissing Uber’s appeal.

Paul Jennings, Rachel Mathieson, and Hannah Wright successfully represented the Claimants in the appeal.

The Facts

Throughout the stages of this case, Uber has been described as a ‘modern business phenomenon’, providing transportation services to millions of passengers in the UK through its smartphone app. Uber has rapidly acquired a dominant position in the market and, at the time of the first tribunal hearing commanded a fleet of around 30,000 drivers in London. This has since risen to an estimated 45,000.

At the heart of the case is the contractual relationship between Uber and its drivers. Uber’s terms characterise the drivers as self-employed independent contractors; it purports merely to grant drivers a licence to use its app, rather than employing drivers to provide the service directly.

The Employment Tribunal (ET) and Employment Appeal Tribunal (EAT) critically assessed the relationship between Uber and its drivers and found that, in practice, the contracts did not reflect the reality of the relationship. Particularly relevant was the amount of control Uber exerted over the drivers in performance of their services. For example, drivers have an obligation to accept work as they were forcibly logged off the App if they declined three trips in a row. Furthermore, cancellations would amount to a breach of the agreement between the driver and Uber unless there is a “good reason” for cancelling. This, amongst other issues, led the EAT to conclude that the ET had been entitled to reject Uber’s characterisation of the relationship and the drivers were in reality more appropriately categorised as “workers”.

Uber’s Appeal

Uber’s principal grounds of appeal to the Court of Appeal centred on the ET decision (as confirmed by the EAT) that the drivers should be legally characterised as “workers”. As before, Uber argued that it was acting merely as an agent. An overarching argument made by Uber was that the company operates in the same way as traditional mini-cab companies and operational requirements interpreted as indicative of “worker” status by the ET are in fact simply conditions of the licence to use their App.

Claimants’ Case

Key to the Claimants’ case was the argument that Uber gave direction and control beyond the conditions dictated by the regulatory requirements which is indicative that the drivers have worker status. For example, Uber’s handles complaints by passengers, including complaints about drivers, and prohibits drivers from contacting passengers.

The Claimants also reiterated their arguments that no written document exists in which the drivers appoint Uber (specifically, Uber London Ltd) as their agent. Contrary to Uber’s interpretation, the Claimants argued that the operational and regulatory regimes are important elements of the factual matrix which must be considered to gain a genuine insight into the relationship between Uber and the drivers. The contract constructed by Uber to govern the relationship with the drivers, argued the Claimants, was not a true reflection of reality.

Court of Appeal Judgment

Worker status

Two of the three judges, Sir Terence Etherton MR and Lord Justice Bean, concluded that the ET were “not only entitled, but correct” to find that each of the Claimant drivers working for Uber should be classified as a “worker”.

The thirteen points drawn out by the ET which led to their conclusions where considered again by the Court of Appeal. The Court found these points to be ample evidence to support the ET’s analysis of the true relationship between Uber and the drivers. In particular, the fact that Uber subjects drivers through the rating system to what amounts to a performance management/disciplinary procedure was described as a powerful point supporting the case that the drivers work for Uber.

The judgment also strongly criticises Uber’s arguments and attitude to the litigation. The Court was not convinced that Uber was merely an agent supporting self-employed drivers to find business and they noted the incongruity of Uber’s arguments in different forums, stating:

“For ULL to be stating to its statutory regulator that it is operating a private hire vehicle service in London, and is a fit and proper person to do so, while at the same time arguing in this litigation that it is merely an affiliate of a Dutch registered company which licenses tens of thousands of proprietors of small businesses to use its software, contributes to the air of contrivance and artificiality which pervades Uber’s case.”

Furthermore, the judgment notes the “high degree of fiction” in the wording of the agreement between Uber and the drivers. They agreed with the Claimants that the agreement fails to accurately reflect reality and endorsed the ET’s findings of fact on this point. The contracts were described as “convoluted, complex and artificial contractual arrangements” and the inequality of power between the parties was highlighted by in the judgment. It was recognised by the Court that the contracts are unilaterally drawn up and dictated by Uber to tens of thousands of drivers, not one of whom is in a position to resist the language used.

When are the drivers workers?

The Court of Appeal agreed with the ET and EAT conclusion that the drivers were working when they are within their territory, with the app switched on, ready and willing to accept trips. The Court considered it particularly relevant that the high level of acceptances required and the penalty of being logged off if three consecutive requests are not accepted within ten seconds make the drivers effectively at Uber’s disposal, and therefore working.

Comment

The impact of this judgment will be significant for not just tens of thousands of Uber drivers, but millions of workers in the gig economy. The mischaracterisation of workers can have very serious and wide ranging implications. Subject to any appeal to the Supreme Court, the financial implications for Uber (who are likely to face back-dated claims from tens of thousands of drivers) will be very substantial indeed.

If you have any questions arising from the content of this article please don’t hesitate to contact Paul Jennings on 0207 551 7694 or Rachel Mathieson on 0207 551 7608.