Uber loses landmark employment rights appeal
The upholding of an earlier judgment by the Court of Appeal means that two former Uber drivers should have been treated as permanent staff and were entitled to receive the national minimum wage and holiday pay, with significant implications for the gig economy
19 Dec 2018
The Court of Appeal has ruled that the drivers 'were workers, employed by Uber London Ltd; and that they were to be regarded as working during any period when they were within their territory…had the Uber app switched on and were ready and willing to accept trips', upholding a 2017 decision by the Employment Appeal Tribunal.
This means that the drivers concerned had the right to national minimum wage and holiday pay. It also means that Uber could face increased employment tax bills in the UK if drivers stop being classed as self-employed.
Yaseen Aslam and James Farrar had contended that they were workers and that they had been underpaid ‘wages’ by reference to the National Minimum Wage Regulations 1999 (NMWR 1999). One of the former drivers also claimed that he has been ‘subjected to a detriment for being a whistleblower contrary to part five of the Employment Rights Act 1996 (ERA 1996)’.
The Court of Appeal discussed whether, 'Uber contracts with the passengers to provide driving services, which the drivers perform for it; or whether, as Uber argued, it acts only as an intermediary, providing booking and payment services, and the drivers drive the passengers as independent contractors'.
It concluded that, 'The written contractual terms say the latter; but the majority hold that they do not reflect the practical reality of the relationships and can therefore be disregarded'.
The IPSE’s deputy director of policy, Andrew Chamberlain, said ‘The first thing to remember is this was not a ruling on all self-employment or even the rest of the gig economy. This was about two drivers in particular circumstances.
‘The fact is most people in self-employment and the gig economy enjoy their flexibility and are happy with their status.
‘What this latest twist in the Uber saga does show, however, is just how complex this area is, and how much it takes to prove who is and is not self-employed.
‘Self-employment is dynamic, always changing and very diverse. This case is only the latest example of how our creaking, outdated employment statuses simply are not keeping up.
‘To clear the confusion of the gig economy and help more people work how they want - in employment and self-employment - the government must introduce a statutory definition of self-employment.’
An Uber spokesperson said: ‘This decision was not unanimous and does not reflect the reasons why the vast majority of drivers choose to use the Uber app. We have been granted permission to appeal to the Supreme Court and will do so.’
Kate Palmer, associate director of advisory at Peninsula, said: ‘The Court of Appeal decision confirms that the employment tribunal was correct to look behind the contractual documentation specifying drivers were self-employed independent contractors to examine the reality of the working relationship.
‘In practice, the drivers were contracted to perform driving work for Uber and they were subject to control by the business which was consistent with a worker relationship, such as being unable to negotiate fees and penalties for turning down work.
‘The ongoing publicity surrounding the Uber employment status case is likely to result in more individuals questioning their true status, whether raised internally within the business or through an employment tribunal claim.
‘Since the removal of fees, there is no barrier preventing self-employed individuals, or even workers, from raising a claim to challenge their status. If the challenge is successful, they may find themselves entitled to greater employment rights and costly back pay in areas such as minimum wage and paid holiday.
‘For the gig economy, all eyes will turn to the Supreme Court as Uber have confirmed they will be appealing to the highest domestic court. With a dissenting judgment in the latest decision, Uber will hope they can successfully overturn the finding that their drivers are workers.
‘For now, many gig economy employers will keep a watchful eye over this case whilst assessing how their business model operates, and treats their workforce, in reality.’
The Court of Appeal has given Uber permission to appeal to the Supreme Court.
Report by James Bunney