News & Insights

Gig economy uber alles?

We report on the failed Uber appeal over the employment status of their drivers and the legal consequences 

In November 2016 we reported on an Employment Tribunal decision that Uber drivers have worker status and are entitled to paid annual leave, the minimum wage and whistle-blower protection (read more here).

Uber appealed the decision arguing that the tribunal had disregarded basic principles of agency law. The Uber appeal was based on the idea that the parent company Uber London Limited was the agent for the drivers and that the tribunal had erred in finding otherwise. Amongst others points, Uber submitted that agency relationships were common in the private hire vehicle sector, that the absence of a written contract between agent (Uber London Limited) and principal (the driver) was not fatal to the existence of an agency relationship and that even though they would indemnify drivers for unpaid fares this should not be taken to mean drivers have worker status.

The Employment Appeal Tribunal (EAT) dismissed the appeal stating that the key question was: “when the drivers are working, who are they working for?”. The EAT stated the tribunal had applied the correct legal principles and had not excluded the possibility that the drivers could operate as separate businesses, but ultimately came to the conclusion that this wasn’t the case for a variety of reasons. These reasons included the fact that the drivers could not grow their businesses or establish business relationships with their passengers. Drivers have no ability to negotiate different terms with their passengers and had to accept Uber’s terms. Meaning once an Uber driver switches on their app they are working for the company under a “worker” contract.

This case has generated interest not only at the EAT and tribunal but also national media outlets due to its potential implications on the gig economy model. The case will be significant for any organisation that operates a business model that is reliant on skills or services provided by individuals on a freelance or ad hoc basic.

However it is worth noting that this decision will not necessarily affect all gig economy businesses as this case is extremely fact-sensitive. The control over the drivers is something that differentiates Uber, so if similar gig economy models were to lessen control over their operatives, it is possible that they could still be genuinely self-employed.

Uber are reportedly planning on appealing the case again, leapfrogging the Court of Appeal and taking the case straight to the Supreme Court. We will keep you updated with any developments.