Uber dismissed: the EAT decides drivers are workers

The Employment Appeal Tribunal (EAT) has upheld the employment tribunal’s ruling that Uber drivers are workers and therefore qualify for workers’ rights.

Here’s the link to the judgment.

Please do let us know what you think in the comments below or drop us an email.

In the landmark ruling, which potentially affects tens of thousands of Uber drivers, the EAT has rejected Uber’s argument that it is simply an agent that connects drivers and passengers.

In the judgment published today the EAT upheld last October’s Employment Tribunal decision. It has confirmed that a group of Uber drivers are workers and are entitled to receive the National Minimum Wage and holiday pay.

The EAT has also confirmed the Employment Tribunal’s finding that the period from when drivers were logged on and ready and willing to accept rides counts as working time, meaning that drivers should be paid at least the minimum wage for that whole period.

In the judgment (on p.48), Judge Eady QC writes:

“On the ET’s findings of fact in this case, I do not consider it was wrong to hold
that a driver would be a worker engaged on working time when in the territory, with the app switched on, and ready and willing to accept trips (“on-duty”, to use Uber’s short-hand). If the reality is that Uber’s market share in London is such that its drivers are, in practical terms, unable to hold themselves out as available to any other PHV operator, then, as a matter of fact, they are working at ULL’s disposal as part of the pool of drivers it requires to be available within the territory at any one time.”

The 25 drivers’ claims brought by the GMB trade union, who were represented by law firm Leigh Day, were heard in the London Central Employment Tribunal in July 2016.

Nigel Mackay, employment solicitor at law firm Leigh Day, says:

“We now hope that Uber will accept this decision, rather than pursuing further appeals. So that we can swiftly return to the Employment Tribunal on behalf of our GMB member clients, for the Tribunal to decide the compensation that they are entitled to.”

Tom Gillie, a barrister at Cloisters says:

“This is an extremely important judgment for the 40,000 Uber drivers in the UK, as well as for others working in the “gig economy.” It demonstrates that while Uber technology presents great opportunities for job creation and provides a convenient service to passengers, it will not be permitted to deny the rights of the very people, the drivers, who allow it to function.”

Martin Pratt, Partner at Gordon Dadds says:

“The Employment Appeal Tribunal (EAT) held that the initial tribunal was entitled to look behind the labels that Uber’s contracts gave to their relationship with the drivers, and find that the true position was that they were workers, not independent contractors.  The EAT said the tribunal below was entitled to reject Uber’s contention that it was a “mosaic of 30,000 small businesses” and find that the drivers were wholly integrated into the company.

“The case will now likely go to the Court of Appeal but, given that the judgment relied on the facts on the ground, rather than an interpretation of the law, something the appeal court is reluctant to mess with, it is hard to see how Uber can win.”

Lee Rogers, Associate in the employment team at Weightmans LLP says:

“The Employment Appeal Tribunal’s decision to uphold the original ruling is not only likely to have ramifications for Uber, but for many other organisations who operate in the so called ‘gig economy’, or engage staff in an atypical way.

“The ruling means that organisations who use ‘self-employed’ labour could find it more difficult to justify their employment model and see an upswing in legal claims from contractors who argue they are in fact a ‘worker’. It is now crucial that businesses seek legal advice to ensure their contracts and policies around the engagement of staff are absolutely watertight.

“Businesses starting out must also look at their employment requirements and carefully consider what model to use in light of this decision. They should not presume that simply categorising staff as ‘self-employed’ will limit their employment rights. An Employment Tribunal will look carefully at the reality of the entire relationship to determine whether this description is accurate and fair.”

Sean Nesbitt, a partner in the Employment, Pensions & Mobility team at Taylor Wessing LLP, says: 

“The judgment is not a surprise.  In recent reported UK cases, workers have won eight out of eight challenges, including at higher levels than this case. But the case covers a number of important points.  Notably, the judge seemed to struggle with the idea that there is really a two-sided market, when there appears to be a one-sided bargain.

The Judgment contains some intriguing other comments. For example:
the requirement that drivers should accept 80% of fare offers, while not indicating total control, indicated overall control. Also, that Uber’s current dominance and size in the London market (30,000 drivers or so) made it less likely that they could hold themselves out as working for themselves or others.

“Honour Judge Eady included a couple of intriguing nuggets relating to the recent attitude of the UK’s Supreme Court to employment-related litigation.  She quotes the recent judgment overturning UK employment tribunal fees as unlawful discouragement of employee litigation.  She quoted that:

“recognising the vulnerability of employees to exploitation, discrimination, and other undesirable practices, and the social problems which can result, Parliament has long intervened in those relationships so as to confer statutory rights on employees, rather than leaving their rights to be determined by freedom of contract.”

“She later (paragraph 100) referred expressly to the now President of the Supreme Court, Baroness Hale. If the case proceeds to the Supreme Court, it will be keenly fought by excellent lawyers but the signs suggest that Uber will continue to be driving uphill.”

James Williams, Partner at Hill Dickinson LLP, says:

 “The effect of this significant decision is that Uber will have to provide its drivers with workers’ rights. These include a host of obligations, including the right to be paid the minimum wage, and to be provided with paid holiday and paid rest breaks.  Unsurprisingly, Uber has confirmed that it will appeal and this could go all the way to the Supreme Court. The implications of this case could have far-reaching consequences for the wider gig economy.”

Bryony Goldspink, solicitor at Gordons law firm, says:

“Uber’s unsuccessful appeal outcome against the recent finding that its drivers were workers and therefore entitled to holiday and sick pay has not come as a huge surprise. There is an ongoing attempt to ensure that individuals are not deprived of the rights they are entitled to by being falsely categorised as self-employed. As technology has advanced we have seen issues arise with app-based and zero-hours employment and the laws regarding worker entitlements and benefits. There continues to be a shade of grey regarding who is a self-employed contractor and who is a worker and it is no wonder therefore that employers also continue to be confused by these terms.”

Glenn Hayes, an employment partner at Irwin Mitchell, says:

“Today’s decision will not just affect Uber but will have a huge impact on other gig economy models. Workers from Deliveroo have brought similar claims and both Citysprint and Addison Lee are appealing against decisions which also found that their drivers were self-employed.  These have not yet been determined and this decision is likely to affect these and other claims where the self-employed models of working are challenged.

“However, I suspect we haven’t seen the end of this particular case. There is so much at stake for both sides and I think it’s inevitable that this will now move to the Supreme Court and might be heard as early as February 2018.”

“Uber has been keen to treat this case as being discrete and have tried to suggest that it has no bearing on the rest of its workforce of around 50,000 drivers in the UK. That is nonsense. This case examines Uber’s business model which applies to all of its drivers and I would expect to see many more claims being issued.

“It isn’t just about the employment rights of Uber’s workforce and the potential flood of similar claims that it could face – there may be significant tax ramifications, if, HMRC decide to challenge the status of the drivers for tax purposes. This will mean that Uber has to account for National Insurance Payments. However, there are other, potentially even higher tax risks to the business. If the appeal courts decide that Uber is providing transportation, HMRC may also argue that it should be charging VAT to customers and paying it to HMRC – and this liability can be backdated by up to four years.”

Nicholas Le Riche, Partner at Bircham Dyson Bell, says:

“The EAT agreed with the Tribunal’s overall approach in determining whether the Uber drivers were genuinely self-employed and therefore the case provides a number of useful pointers to how the employment status of individuals in the gig and sharing economy will be judged.  In particular, the EAT emphasised again the importance of looking at the reality of the drivers’ working relationships with Uber rather than simply relying on the contractual documentation that may be in place.  The important features of today’s decision should now be followed when Tribunals look at other cases concerning the employment status of individuals working in the gig economy.”

Kate Gardner, a Partner at Clarke Willmott LLP, says:

“The EAT concluded that on the evidence, drivers were expected to accept at least 80% of trip request and that this very high percentage justified the Tribunal’s conclusion that in reality drivers were working at UBER’s disposal and within their full control; they were not self-employed entrepreneurs , they were truly ‘workers’ and need protective rights.

“This ruling has been followed by several other recent Tribunal judgments, in particular concerning cycle couriers, again who have been required to sign up to a contract as a self-employed contractor when in reality they are fully controlled by the company.

“This decision represents a trend of the generation of travel on this issue, which is that dependent individuals working in big economy businesses, may well be workers rather than genuinely self-employed.  The next step is waiting to see whether the Government will act on this raft of decisions and consult on the recommendations that this area is more closely regulated.”

Tim Goodwin, associate at Winckworth Sherwood, says:

“This is a hugely significant decision for Uber, and also the gig economy more generally.  Increasingly, we are seeing that Courts and Tribunals are reluctant to allow businesses to have their cake and eat it, by exercising enormous control over their workforce whilst also denying them basic rights like paid holiday, sick leave and protection from discrimination.

“The test appears to remain the same. If a business wants to have significant control over its workforce, it has to be prepared to treat its workers fairly.  If the business is prepared to allow the worker a significant degree of latitude in his or her dealings, then it will be more likely that it can get away with calling them a self-employed contractor.  Either way, self-employed status cannot be imposed from the top down – it has to reflect the reality of the arrangement between the worker and the business.”

Maria Ludkin, GMB legal director, says:

“This landmark decision is a yet more vindication of GMB’s campaign to ensure drivers are given the rights they are entitled to – and that the public, drivers and passengers are kept safe. GMB is delighted the EAT made the correct decision to uphold the original employment tribunal ruling. Uber must now face up to its responsibilities and give its workers the rights to which they are entitled. GMB urges the company not to waste everyone’s time and money dragging their lost cause to the Supreme Court.”

Harry Abrams, Solicitor at London law firm Seddons, says:

“All of these entitlements will increase Uber’s costs which presumably will be passed on to the consumer. However this decision has reconfirmed that the drivers are not to be considered as “employees” so the drivers will not have any unfair dismissal rights or rights to redundancy payments. It is a further boost to those wanting to clamp down on the gig economy and prevent companies such as Uber exploiting those who operate within it. It is not yet clear whether Uber intend on appealing today’s EAT decision.”

Liz Stevens, Professional Support Lawyer at Birketts says:

“The EAT’s decision will come as no surprise to those who have been following the recent series of cases challenging the employment status of those engaged in the gig economy.

“However, what is notable about the judgment by Her Honour Judge Eady QC is that it emphasises the crucial role of the employment tribunal in reaching its decision based on the facts before it, and the reluctance of the EAT to interfere with those findings of fact.

“Just because in previous cases cited in the appeal taxi drivers were found to be working for themselves (with the taxi firm acting as ’agent’ for the drivers), this does not mean that the tribunal was obliged to find the same business model applied in Uber’s case, or for that matter in any other business operating in a similar way to Uber. It will all hinge on the facts of the arrangement in question, which is a matter for the employment tribunal to determine.

“So once again, we have a decision on the issue of employment status which can be properly described as being highly ‘fact specific’, and for this reason it is difficult to draw any broader conclusions. However, the case does serve to reiterate the tribunal’s role in establishing the true relationship between the parties, and that it can legitimately disregard any contractual provisions, however creatively drafted, if they do not reflect the reality of the arrangement.”

Kevin Charles, Consulting Barrister, at Crossland Employment Solicitors, says:

“The decision signals what may be viewed as a curtailment of the use, or misuse, of thousands of ‘workers’ within the rapidly growing modern business phenomenon, known as the ‘gig economy’. Whilst each case will have to be decided on its own facts the EAT’s decision will no doubt make it easier for many people working in the ‘gig economy’ to argue that you have to look at the reality of the situation and not just the contract and that they  now fall within the definition of ‘worker’ where previously they had been treated as ‘self-employed’ and denied access to any employment rights.

“The EAT’s decision will no doubt be welcomed and celebrated by the 40,000 Uber drivers working in the UK and many others in a similar position.  However, they may wish to leave the champagne on ice pending any appeal by Uber to the Court of Appeal which will undoubtedly follow.”

Carolyn Brown, employment partner and head of RSM Legal says:

“The likelihood is that Uber will try to appeal the decision to the Court of Appeal which means their fight may not yet be over. If Uber cannot get this decision overturned though, it will have a significant impact on their business model. With control being a critical factor in the assessment of the taxi drivers’ working status but a key requirement for the service Uber provides, something may have to give.

“Probably a more pressing concern for Uber though is the possible consequences it may have on their exposure to tax and National Insurance Contribution liabilities.  As it stands, Uber would not be obliged to pay employer NIC in respect of their drivers if they are self-employed. If they are workers though, they may be exposed to a significant NIC liability. There may also be a substantial VAT liability.”

Jenny Jones, Director at MDJ Law, says:

“This decision should be a cautionary lesson for employers that the courts will be prepared to look behind the contractual paperwork to determine whether it truly reflects the day-to-day factual position. In this case, the EAT agreed with the first instance decision that it did not, and the uber drivers were not self-employed but were workers.  As such they are entitled to the rights that workers have at law.”