Uber and the 'gig' economy

On 28 October 2016, the employment tribunal delivered the most hotly anticipated decision of the year in Aslam, Farrar and others v Uber (Case Nos 2202551/2015 and others). The Uber case was the first big test of how the gig economy measured up to decades-old principles of employment law.

The GMB union brought a test case against Uber on behalf of 17 drivers in the employment tribunal, arguing the drivers were workers rather than self-employed or employees.

The employment tribunal accepted this, meaning the drivers now accrue certain statutory rights, such as the maximum working week of 48 hours (on average), 5.6 weeks’ paid annual leave, rest breaks, weekend and overnight breaks, national minimum or living wage (depending on the age of the driver), protection for whistleblowers, protection from unlawful deductions from their pay, and family-friendly rights (parental, adoption, maternity, and paternity leave).

Following the decision of this preliminary hearing, the tribunal will now list and hear the drivers’ claims for the minimum wage, paid annual leave, and protection for whistleblowers.

Worker status

The employment tribunal had to determine a number of issues relating to section 230 of the Employment Rights Act 1996 and related case law. First, was the driver working under a contract? Second, did the work done by the driver have to be done by them personally (as opposed to being delegated) for the company (in this case, Uber)? Finally, was Uber a client or customer, rather than the party having control of the performance and provision of the work in question?

Since Young & Woods v West [1980] IRLR 201, the employment tribunals have used a test of substance and not form to determine the status of the person doing work. This was confirmed by the Supreme Court in Autoclenz Ltd v Belcher [2011] UKSC 41, where it was stated that ‘the question in every case is… what was the true agreement between the parties’.

As a result, the courts will look at the reality to ensure it is not a sham agreement. This is because of the inherent inequality of bargaining power between the individuals and the company. Drivers find themselves bound to accept the wording imposed upon them, because the alternative is getting no work at all.

The tribunal stated in its reasons: ‘Many Uber drivers (a substantial proportion of whom, we understand, do not speak English as their first language) will not be accustomed to reading and interpreting dense legal documents couched in impenetrable prose’. It appears the tribunal was unimpressed by Uber ‘resorting in its documentations to fictions, twisted language and even brand new terminology’. It went on to say: ‘Just as in Autoclenz, the employer is precluded from relying upon its carefully crafted documentation because, we find, it bears no relation to reality.’

Control test

Control has for many decades been part of the test for employee status and translates into the test for a ‘worker’. Employment law used to be called the law of ‘master and servant’, which should indicate the importance of control in determining this important question.

The facts in the Uber case are fascinating. Although no uniform or corporate branding is required by Uber of drivers, Uber dictates many other issues. One is that there is a period of only ten seconds in which an available driver has to accept a job. When making that decision, they have no knowledge of the destination of the traveller. Uber holds the relevant information, but does not provide it to the drivers (neither passenger nor driver has the telephone number of the other when the agreement is made to accept the ride).

The tribunal also considered a number of ways in which drivers are controlled or regulated by Uber: drivers are recruited by Uber following an interview; the drivers have to have an acceptable model of vehicle, ideally in silver or black; the route to be taken is dictated by Uber with consequences for failing to do so; drivers are obliged to maintain a high customer satisfaction rating of 4.4 (or face quasi-disciplinary consequences, including the termination of their relationship with Uber); drivers with an unacceptable cancellation rate are reprimanded; the fare is fixed by Uber (with no discretion for either driver or passenger to set a higher fare); drivers obtaining tips are actively discouraged; and confidentiality duties are imposed on the drivers. All of this suggests a remarkable degree of control exerted by Uber, rather than drivers being in business on their own account.

If a person is ‘in business on their own account’, taking a risk with their investment to obtain return, then this is a factor incompatible with worker status. Obviously, the power to gain customers and retain them would be indicative of this. However, in this case, the drivers ‘do not market themselves to the world in general; rather, they are recruited by Uber to work as integral components of its organisation’: the drivers cannot give their contact information to obtain future work from passengers directly.

Militating against this is the fact that the drivers must supply their own vehicles, and remain responsible for its maintenance and the payment of fuel, MOT checks, road tax, and insurance.

However, payment is made to the drivers each week, in a manner reminiscent of wages. Payment is not made as and when it clears, which would indicate a job-by-job relationship.

Further, should a ride be obtained by a passenger through fraud, the general practice of Uber is to pay the driver and accept the loss. Where a vehicle has been soiled by a passenger, in certain circumstances, Uber will pay towards the cleaning of the driver’s vehicle.

The fact of there being ‘dependent work relationships’ is critical. Where there is a promise to provide work on the part of the digital business and an obligation to do the work provided by the driver (‘mutuality of obligations’), there tends to be the opposite of a self-employed relationship. In this case, an Uber document states that drivers ‘should accept at least 80 per cent of trip requests to retain [their] account status’, thereby placing a significant duty to accept work upon drivers when available.

Only a genuine right to delegate the work or a free right of the individual to choose whether or not to take a job and to refuse jobs would assist the business in deflecting a finding of worker status. The ten-second period for accepting work has already been discussed. Further, drivers who decline three consecutive trips are forcibly prevented from obtaining further work through being logged off by Uber for a period of ten minutes. Another relevant consideration is that the right to use the Uber app by drivers is non-transferable and drivers cannot share accounts. The relationship is between an individual driver and Uber alone.

Technological element

Uber sought to argue that the app made the company unique. This could be seen as an attempt to blind the tribunal with technology. However, the tribunal took into account the decision of the North California District Court in Douglas O’Connor v Uber Technologies Inc (C13-3826 EMC), which stated: ‘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.’

Interestingly, the fact that Uber is a contemporary, up-to-the-minute app was largely irrelevant in this case. Many had thought the use of technology in the digital age would be a profound influence on the decision. However, the reality is more down to earth and mundane. The test of the status of an individual draws from long-established case law: piecework cases involving machinists from the late 70s and early 80s; observing the economic reality and level of risk entered into by the individual; mutuality of obligation; and finally the decades-old concept of control. These principles are as useful today as they have always been.

Other Uber drivers may now bring their own claims for the rights of workers, and those employed under other digital business models may well find they are entitled to similar protection. Uber has requested an appeal and these issues may be reconsidered, despite the employment tribunal’s careful and astute reasoning. The contemporary work environment may well have changed immeasurably over the last 30 years. However, the essential definitions of employee and worker status remain. A central hallmark is common: a non-delegable service done by an individual for a company as per the acceptable standards imposed by the corporate entity results in some form of employment rights being conferred. Don’t be blinded by technology; the answers are to be found in time-honoured, reliable statements of principle.

Snigdha Nag is a senior lecturer at The City Law School

@CityLawSchool www.city.ac.uk/law