“Gig Economy” Working: What are the latest tribunal decisions?

The fast growing trend of ‘gig economy’ working is becoming an ever more divisive and complex area. The term is used to describe a relatively new way of working which involves workers taking on short-term, on-demand jobs on a ‘gig’ basis. The most well known names practicing this structure include Uber and Deliveroo, both of which work through apps to accommodate quick demand services in taxi rides and food delivery. At a time where anything can be done through an app and speed is a key contributor to customer satisfaction, it is clear that more services are inevitably going to follow in using these structures to satisfy demand and keep up with the times.

But how will these arrangements develop further, and how will the worker relationships between parties be ultimately defined? Will all ‘gig’ workers be entitled to basic employment rights, or would a self-employment model suit a particular business better?

The Employment Appeal Tribunal (EAT) has recently had to consider these interesting questions, most recently in the appeal case of Uber BV v Aslam UKEAT/0056/17/DA.

So, what was the context here, and how did the Employment Tribunal (ET) and EAT deal with this?

Facts

Uber has around 40,000 Uber drivers operating in the UK, with some 2 million passengers registered to use its services in London alone. The claimants were a consolidated group of current and former Uber drivers, who brought claims under the Employment Rights Act 1996 (“ERA”), the National Minimum Wage Act 1998 (“NMWA”) and the Working Time Regulations 1998 (“WTR”), on the basis that drivers were not being given basic employment rights applicable to “workers” such as being paid the national minimum wage, or paid holiday. Uber responded to say that the drivers were not “workers” at any time, but were third party self-employed contractors, who were therefore not entitled to the protection that the above legislation provided.

The key issue was this: Were the drivers “workers” for the purposes of the legislation to provide them with basic employment rights? Two ‘test claimants’ were selected for the preliminary hearing.

Employment Tribunal (October 2016)

The ET examined the terms between Uber and the passenger closely to determine how the relationship worked, and whether the drivers could be categorised as “workers”.

Uber’s arguments

As part of its analysis, the ET looked at the “Rider Terms”, which sets out that passengers “acknowledge that Uber does not provide transportation, logistics, delivery or vendors services or function as a transportation provider or carrier and that all such transportation, logistics, delivery and vendors services are provided by independent third party contractors who are not employed by Uber or any of its affiliates. This was the main argument adopted by Uber to say that the position on the status of the drivers was clear i.e. that they are all self-employed contractors who are not entitled to employment rights under the domestic legislation.

Uber also tried to argue that, under its “Partner Terms” (which document the relationship between Uber and the drivers), Uber was not a provider of transportation services, but that it offers “information and a tool to connect Customers seeking Driving Services to Drivers…and it does not intend to provide transportation or act in any way as a transportation or passenger carrier”.

Essentially, Uber tried to avoid claiming that it provided driving and transportation services, and instead tried to place this on the drivers to support the claim they were self-employed, picking up their work through the facilitation of their information-only app which connects the parties, but no more than that.

It was made clear under various Uber terms that access to the app was personal to the “Partner” and “Customer”, and was non-transferable, meaning that there was no capacity for drivers to share their IDs, share their accounts, or for any drivers to be replaced by a substitute on a job. This is an interesting point which will be considered below in light of the recent Deliveroo decision of the Central Arbitration Committee (“CAC”) on 14 November 2017 (discussed below).

In the ET, Uber also maintained that the drivers were solely responsible for all costs incidental to owning and maintaining their vehicle, including fuel, insurance, road tax and repairs. All of these factors were used to support the argument that Uber drivers were self-employed contractors, and therefore not entitled to the basic employment rights discussed above.

Driver’s arguments

It was the claimant’s case that Uber instructed, managed and controlled the drivers in different ways, particularly through the imposition of various obligations and penalties.

For example, if a driver declined to accept three trips in a row, they could be forcibly logged off the app for 10 minutes, affecting the driver’s opportunity for jobs during that working day. While Uber denied that this was a penalty, similar warnings applied to where a driver cancelled a trip after it had been initially accepted.

Another example put forward of Uber exerting control or management over the drivers was the rating system which requires customers to rate their drivers at the end of their trip. These ratings are monitored by Uber, and those drivers with average scores of below 4.4 out of 5 become subject to “quality interventions” which aims to assist improvement.

The claimants also argued that the written terms between Uber and the drivers did not properly reflect the relationship and should be read with some scepticism. They submitted that, at least for the time the app is on, the drivers came within the definition of “worker” for the purposes of the ERA. It was also argued that the driver’s working time should begin when they left home and end when they returned home, and that travelling to and from work counted as work for the purposes of the NMWA, or at the very least that the drivers were considered working at all times when they were logged into the app.

Uber hit back by stating that the terms were valid and fairly defined the working relationship. Their defence to the use of “penalties” was simply to reflect the common interest of the parties in maintaining service standards. Uber also argued that for the purposes of WTR and NMWA, the drivers actual working time was limited to when they were carrying passengers.

Conclusions of the ET

The ET rejected many of Uber’s arguments, concluding that while any Uber driver has their app switched on, is within a territory in which the driver is authorised to work, and is able and willing to accept jobs, the driver is working for Uber under a “worker” contract.

It was the ET’s opinion that Uber’s documentation resorted to “twisted language” which warranted a “degree of scepticism”, and that it was “unreal” to deny that Uber was in business as a transportation services supplier. The ET pointed out that Uber markets a range of products, and questioned that if these were not Uber’s products, then to whom did they belong? The products comprised a variety of driving services, and the ET stated that each individual driver does not offer such a range. The marketing by Uber was not put out there for the benefit of any individual driver, and was done to promote the Uber name and sell its transportation services.

The ET also concluded that there were many factors which indicated that the relationship between the drivers and Uber was that of a worker relationship, including the following:

  • Uber had an interview and recruitment scheme for drivers;
  • Uber imposed obligations on drivers, instructing them as to how to carry out their work and controlling them in the performance of their duties;
  • Uber required drivers to accept trips and/or to not cancel trips, and enforced that by imposing the penalty of logging drivers off the app who “breached” the conditions;
  • Uber set the default route of the trip, essentially telling the drivers which way to take;
  • Uber subjected drivers to a passenger led rating system, in what amounted to a form of performance management scheme and/or disciplinary procedure;
  • Uber handled complaints made by passengers, including those about the drivers themselves; and
  • Uber reserved the power to amend drivers’ terms unilaterally.

The ET also clarified that a drivers working time would start as soon as the driver was within their territory, had the app switched on and was ready to accept trips. The working time would end as soon as one of these conditions ceased to apply. Where a driver also happens to live in the territory in which the driver works, working time would begin as soon as the driver leaves home.

Employment Appeal Tribunal

Uber appealed the decision of the ET, and on 10 November 2017, the EAT dismissed their appeal. The EAT stated that when a driver switched the app on, they were then obliged to be “able and willing to accept assignments”, and were subject to certain requirements imposed by Uber, such as having to accept at least 80% of pick-up requests.

The EAT agreed that all of the factors discussed by the ET indicated a “worker” relationship. Uber argued that the ET had erred in disregarding the contractual documentation, stating that there was no contract between the claimants and Uber London Limited, but that there were written agreements between the drivers, Uber BV, and riders, which were inconsistent with the existence of a worker relationship. Uber therefore tried to argue that the ET had disregarded the basic principles of agency law. However, the EAT disagreed, concluding that the ET was entitled to reject the label of agency and was right to consider what it considered was the “true agreement” between the parties. The EAT held that the ET was correct to say that Uber was not acting as an agent between the drivers and passengers, and that even where there were supposed “gaps”, e.g. when the app was not on, this was not fatal to the drivers worker status.

Analysis

Due to the increasingly consistent attitude of the courts to grant ‘gig economy’ workers basic employment rights by declaring them as workers, it is likely that this will pave the way for more claims to come through affecting those operating on a ‘gig economy’ basis, powered through apps and on-demand services. Time will tell whether the trend in the Uber case will continue. In some cases, it is said that some workers would prefer to be categorized as self employed. The Managing Director for Deliveroo in the UK stated that the decision by the CAC was a “victory” for their riders who value flexibility as their top priority in their work with the company. However, others disagree. The General Secretary for the Independent Workers Union of Great Britain (who brought this test case against Deliveroo), commented that in this particular case the “so-called gig economy company has found a way to game the system”.

It therefore remains to be seen what further developments there will be in this area, and whether many more cases will come through the courts to test the various different ways of working and working structures in the ‘gig economy’. It will also become clearer how this will affect contractors/workers/employees themselves, and how they would prefer to be classed. Will the values of flexibility for workers override the need for stable employment rights? Will the tribunals opinion always be consistent with the same types of work?

Indeed, the introduction of Uber Eats will inevitably throw more arguments into the mix, especially considering the recently decided case of Deliveroo, whose couriers and riders have been ruled as self-employed by CAC. However, a distinction can be made here between Deliveroo and Uber. While Uber does not allow drivers to share accounts and “substitute” drivers on jobs, Deliveroo does give their couriers this capability to allow other riders to take their place on a job. Genuine substitution rights distinguish between worker and self-employment status, as they indicate real flexibility and autonomy for the individuals in providing their services.

The EAT agreed that all of the factors discussed by the ET indicated a “worker” relationship. Uber argued that the ET had erred in disregarding the contractual documentation, stating that there was no contract between the claimants and Uber London Limited, but that there were written agreements between the drivers, Uber BV, and riders, which were inconsistent with the existence of a worker relationship. Uber therefore tried to argue that the ET had disregarded the basic principles of agency law. However, the EAT disagreed, concluding that the ET was entitled to reject the label of agency and was right to consider what it considered was the “true agreement” between the parties. The EAT held that the ET was correct to say that Uber was not acting as an agent between the drivers and passengers, and that even where there were supposed “gaps”, e.g. when the app was not on, this was not fatal to the drivers worker status.

Taking all of this into account, the ET held that the drivers fell into the definition of a “worker”, concluding that they were therefore entitled to basic employment rights such as the national minimum wage and paid holiday.

With Uber indicating their submission of a further appeal, this is definitely not the end of the matter.

This article was written by Clare Gilroy-Scott, Partner, Employment, with assistance from Becky Minear, Trainee Solicitor.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.