Employment Law Snapshot – Issue 11
Welcome to Issue 11 of my Employment Law Snapshot.
I’m writing this edition on Tuesday 8th November and the polling stations have just opened for the American Presidential elections. So, at the moment I have no idea who has won, even though this Snapshot will be published when the result is known. Therefore, I’m going to cover both bases.
- So, Hilary Clinton has won, just as all the polls pretty much predicted since the beginning of the Presidential race. Phew, that was a close call, but common sense has prevailed.*
- Ok everyone, Donald Trump has just won the Presidential election and America has already been renamed the United States of Trump. I’m not remotely concerned about this; everything will be fine. I’m just packing up a few essential supplies of food and water and heading down to the bunker at Tibble Towers…*
[*DELETE AS APPLICABLE]
On a similar note, this week’s case is also about a recent outcome arising from two warring factions that have been in dispute for the last 12 months. I am, of course, talking about the Uber case.
On with the law.
The Legal Stuff
This week’s case is called Aslam and others v Uber BV and others.
A number of Uber drivers brought claims for unlawful deductions from wages through an alleged failure to pay the national minimum wage and for a failure to provide paid holiday leave. Two of the drivers were selected as test claimants. In order to be successful with their claims, the drivers had to demonstrate that they were ‘workers’, as opposed to self-employed drivers.
In order to be classed as a worker, the Employment Tribunal had to consider a 3 stage test. Firstly, there had to be a contract between the driver and Uber. Secondly, the driver had to perform services personally for Uber. And finally, the Employment Tribunal had to consider whether the drivers had their own business undertaking and if so, whether Uber should be viewed as a client or customer of the drivers’ business.
The Uber case essentially hinged on the third part of the test, which meant that the Employment Tribunal had to look at the reality of the working relationship between Uber and the drivers and in particular, the level of control that Uber had over them.
Uber argued that they were not providing a transport service. Instead, it said that it was just a technology company which was essentially an “app” putting drivers and passengers in touch with each other. Uber said that the drivers were free to choose which fares to accept and did not have to work at particular times. It said that the drivers were required to maintain their own vehicles and pay for the running costs. Finally, Uber said that the drivers did not have to work exclusively for Uber.
The drivers argued that Uber controlled how much passengers were charged and required the drivers to follow particular routes. They said that the passengers paid Uber for the journey and then paid a percentage of the fare to the drivers. Finally, the drivers said that Uber used a ratings system to rate their performance. As such, the drivers argued that Uber had sufficient control over the drivers to warrant a “worker” relationship, as opposed to a self-employed one.
There was also a lot of scrutiny by the Employment Tribunal of the contracts that existed between Uber and the drivers and Uber and the passengers. Uber argued that the agreement with the drivers was clear and that it was designed to allow both parties a sufficiently flexible relationship so that the drivers were genuinely self-employed. The drivers argued that the agreement did not properly reflect the reality of the relationship between them and Uber.
It’s probably fair to say that the Employment Tribunal was pretty scathing about the submissions put forward by Uber, particularly the one in which it said that it was not running a transport service. The Tribunal concluded that Uber’s central function was to carry people in cars from one point to another and that it operated in part through a company that is regulated as a private hire vehicle operator. The Tribunal also relied on the fact that in submissions to the Greater London Authority Transport Scrutiny Committee, Uber had boasted about providing job opportunities and potentially generating tens of thousands of jobs in the UK. The Tribunal also agreed with the findings of the North California District Court, in a similar case brought by Uber drivers in America, that ‘Uber does not simply sell software; it sells rides.’ The Tribunal also said that Uber’s view that the drivers were simply a collection of 30,000 small businesses linked by a common platform was ‘faintly ridiculous’.
As far as the actual relationship between Uber and its drivers was concerned, the Tribunal concluded that Uber exercised a high degree of control over the drivers. Some of the examples that the Tribunal referred to in order to demonstrate this point included the fact that:
- Uber fixes the fare and drivers cannot agree a higher sum with the passenger;
- Uber requires drivers to accept and/or not to cancel trips and enforces this requirement by logging off drivers who breach it;
- Uber sets the default route for each trip and the drivers might face deductions from the fare if they depart from it;
- Uber subjects drivers through its rating system to what the Tribunal said was effectively a performance management/disciplinary procedure;
- Uber handles passenger complaints and determines issues about passenger rebates, sometimes without involving the driver affected.
In conclusion, the Tribunal decided that the two test claimants were, in fact, workers. As such, they are entitled 5.6 weeks’ paid annual leave each year, a maximum 48 hour average working week and the national minimum wage.
There has been a lot of discussion about how this decision could impact on the ‘gig’ economy. But, let’s not forget that Uber are likely to appeal the decision, it’s only the decision of an Employment Tribunal and therefore it’s not binding on future cases and importantly, the decision is highly fact-sensitive. Even the Tribunal itself suggested that Uber could have come up with a business model that would have led to different decision. So, as far as the gig economy is concerned, this isn’t the end of the road yet for the self-employed, but it certainly means that operators in this market need to be very careful to stay on the right side of the law.
Staying on the subject of the Presidential elections, before I wrote this Snapshot I happened to look on the BBC News website to get an update on what was happening.
Bizarrely, on the ‘most read’ section of the BBC news page, the Presidential election languished in second place. In first place was the far more controversial issue about the fact that the manufacturer of Toblerone has decided to reduce the weight of the chocolate bar and make the gaps between the triangles bigger. It’s nice to know that us Brits have got our priorities right!!
Until next time.