Lessons to be learned from Uber and Deliveroo

Last November we updated you on the EAT’s ruling that Uber drivers should be classified as ‘workers’ and not self-employed. Now one of the most high-profile cases regarding the ‘gig economy,’ most employers will be familiar with the case. You can read the full judgement here.

Essentially, two Uber drivers brought a claim to the Employment Tribunal for unlawful deduction from wages, as well as a failure to provide paid leave. The drivers won the case, successfully persuading the Employment Tribunal that they were workers, and as such were protected under the Employment Rights Act 1996 (ERA). Uber, however, continued to argue that the drivers were in fact self-employed, and so the protections of the ERA did not apply to them.

Whilst Uber appealed this decision to the EAT (unsurprisingly, given the potential costs to Uber that the ruling could incur), the EAT upheld the Tribunal decision and found that the drivers are workers. This means that Uber drivers, as well as being entitled to the minimum wage and paid annual leave, can also raise claims for unlawful deduction of wages.

It’s a good idea to pause and consider the arguments that Uber put forward, which the EAT subsequently dismissed. Uber argued that:

  • It only provides the technology platform to facilitate a taxi service, rather than providing a taxi service itself;
  • The taxi service is, instead, provided by the driver and there is a contract between driver and passenger for each journey;
  • The drivers are self-employed;
  • Uber London Limited holds the required private hire vehicle operator licence.

But the EAT backed the Tribunal’s original decision, stating that this arrangement was indicative of worker status. It claimed that:

  • There is an interview process for potential Uber drivers and successful candidates must complete an induction;
  • A driver can be terminated in the case of serious misconduct or if their ratings drop;
  • Whilst drivers might be able to decide where they can work, they are required to undertake to the work personally for Uber, which indicated an employment relationship.

Whist the Tribunal held that Uber drivers are not obliged to turn on the Uber application or accept an assignment, a driver is working for Uber under a worker contract if:

  • Has the application turned on;
  • Is within their authorised territory for work;
  • Is able and willing to accept assignments.

This means that they should be afforded worker rights and protections in accordance with the ERA.

But it isn’t all bad news for the flexible workforce, or those that want one. It’s certainly not impossible for companies to enter into a genuine contract of self-employment, but employers must remember how this operates in practice. It doesn’t matter what label either party may put on their relationship, if the legal definition with ‘worker’ is met then the party providing the service is likely to benefit from worker rights.

The outcome of the Uber case is similar to that of Deliveroo, which received a judgement on their case last November. Deliveroo is another app-based service, with riders delivering takeaway food to customers from participating restaurants. Unlike the Uber case, however, Deliveroo riders were not found to be workers by the Central Arbitration Committee (the CAC) after the Independent Workers Union of Great Britain submitted an application.

The CAC made a decision on the basis of section 296 of TULRCA, whereas in the Uber case, the definition of a “worker” is set out in section 230 of the Employment Rights Act. The interpretation of the Employment Rights Act is outside the jurisdiction of the CAC, and so its comments would not be binding on an employment tribunal here. In the Deliveroo case, on there was evidence that riders took advantage of their right of substitution and sent another rider on a delivery in their place.

This goes to show that, whilst genuine self-employment is possible, it needs thought out, particularly in the current climate, if you’re to avoid a costly dispute.

For more expert HR advice, you can contact Alison here.

 

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