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Uber story and working in the gig economy

Posted on 15th November 2017

Since its creation in March 2009 Uber has expanded rapidly and is now operating in over 60 countries worldwide, with a recent valuation of over $60bn. It allows its users to get from ‘A’ to ‘B’ at the click of a button. However it has not been an easy ride for the company as it has faced a number of legal claims globally.

In the world of employment law this took the form of a claim in 2015 by a group of Uber drivers about their employment status with Uber.

Uber driver claims

The claims brought against Uber related to claims for national minimum wage, paid holiday and whistleblowing. The success of the claims turned on whether the drivers had worker status.

Uber denied that the drivers were ‘workers’ entitled to any of the above protections and were in fact self-employed.

Worker or self-employed?

In arguing worker status the drivers needed to show that Uber had a level of control over them that you would not expect if they were self-employed. They made the following arguments:

  1. When you agree to accept an Uber your money does not go directly into the driver’s bank account. The money first goes to Uber where their service charge is deducted (the charge which the drivers pay for use of the software) and then into the driver’s account. If a passenger complains that the driver has taken them on a circuitous route and Uber agree they can deduct an amount from the fare before paying it to the driver.
  2. In the event of a passenger complaint regarding deviation from the route suggested by Uber this must be explained by the driver.
  3. Many of the terms of the agreement between the driver and Uber demonstrate the control the company has over its drivers. Drivers are expected to ‘comply at all times with the quality standards set by Uber…’ and drivers can expect to have the agreement terminated unilaterally if this is not the case.
  4. Before becoming a driver for Uber you must first register an interest online and then attend a form of induction, known by Uber as ‘onboarding’. An email sent by to prospective drivers was titled ‘Book an interview slot NOW!’ This was evidence that Uber itself considered the drivers to be more than just individual business people.
  5. Drivers must accept at least 80% of trip requests to retain their account status and if they miss three trips in a row they may be forcibly logged off the app.

Sounds fairly controlling

In arguing that the drivers were self-employed Uber wanted to show that they were not in the business of providing a transportation service. Rather they were assisting drivers to connect with potential customers through their app. They tried to demonstrate this by giving the following examples:

  1. The driver is responsible for all costs including fuel, repairs, maintenance, MOTs, road tax and insurance.
  2. TfL require anyone driving a private hire vehicle in London to pay for a license. It was the drivers, not Uber, who paid for this.
  3. Drivers can elect which product to utilise. When Uber say ‘product’ they mean that the drivers can choose to driver Uber pool, executive, luxury and so on.
  4. Drivers are self-employed for tax purposes.
  5. Drivers are not branded and in London they are discouraged from displaying any Uber branding.
  6. A crucial argument for Uber was that the drivers are never under any obligation to turn the app on. Dormant drivers are not penalised. If this is the case then the drivers are able to pick when and where they wanted to work just as somebody who is self-employed decides when they want to work.

Uber wanted the Tribunal to see the drivers as individual sole traders linked only by the technology which they provided. Indeed, Ms Jo Bertram, a top Uber executive in London at the time, tried to argue that the company was simply helping individuals to ‘grow their businesses’.

Tribunal decision in October 2016

The Tribunal accepted that the drivers did not have to turn on the app and whilst it was off there was no contractual obligation between the drivers and Uber. However when the app was on, the Tribunal found that Uber had such a level of control over their drivers that they should be considered workers.

Throughout the case Uber sought to drive home the point that that they were not a transportation company but more of a facilitator. The constant repetition of this particular refrain did nothing to persuade the Tribunal who commented that:

‘The lady doth protest too much, methinks.’

The Tribunal also found the idea that Uber were just a technology company ‘faintly ridiculous’ and quoted a decision by a Californian court, which it agreed with:

‘Uber does not simply sell software; it sells rides. Uber is no more a “technology company” than Yellow Cab is a “technology company” because it uses CB radios to dispatch taxi cabs.’

Drivers 1 Uber 0 at the end of round one.

The Appeal

On appeal Uber claimed in the original decision the Tribunal had made the following errors:

  1. That it should not have disregarded the agreement between Uber and the drivers.
  2. That the Tribunal’s judgment was inconsistent.
  3. That they had ignored facts which made it clear that the drivers were carrying out their own business.

The Employment Appeal Tribunal decided:

  1. The Tribunal was right to look at the reality of the situation and then see if this was reflected in the agreement. When it found the reality was different they were free to dismiss the agreement.
  2. The Tribunal’s findings were not inconsistent and had taken into account Uber’s own description of the work done by drivers.

The appeal was dismissed.

Working in the gig economy

This case has highlighted that changes in how people work are throwing us some complex questions. The desire for working with flexibility should not result in a loss of protection and important rights allowing businesses to exploit cheap labour.

The report by Matthew Taylor argues for new legislation that would factor in the ‘gig economy’. He suggests using technology to help a new sub-set of workers, ‘designated contractors’, to retain the flexibility they have whilst still being afforded rights. This could be done, Taylor believes, using the companies’ own data to ensure that workers are being paid the minimum wage. Conceivably the same could be applied to holiday and sick pay.

Of course self-driving cars could render the whole question of worker or self-employed entirely academic. Whilst this may seem a little way off Uber, Google and others are currently investing vast sums of money to make this happen. No worker, no problem.

Whether Uber survives or not is yet to be seen but a return to the days of standing in line at the mini cab office with your chips is unlikely. The technology is out there and it will be for another company to learn from Uber’s mistakes and provide a service which turns a profit and keeps within the law.

More broadly the Tribunal’s decision should be a warning to companies to really look at the reality of the relationships they have with their workforce. Lawyers can draft whatever they like but under close scrutiny of a judge, false labels count for nothing.

As has been noted in this area before, if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

Our Employment Law Solicitors are backed by four decades of experience. Our legal practice and team of London Solicitors have a strong track record of achieving favourable client outcomes. For expert legal advice use our contact form or call us on 0808 250 6017 today.

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