Our thoughts on the world of employment law - and beyond.

Uber - In for a bumpy ride?

Uber. We’re all guilty of taking one, or two or three... The ease at which we can order and pay for a taxi has enticed London city-goers to take over 20 million rides since the app was launched in June 2012. As well as proving immensely popular, this taxi-hailing app has had its fair share of negative press, including being banned in both France and Spain.

As Anna mentioned in her blog piece in June, a Californian court recently ruled that an Uber driver was an employee, not a self-employed contractor. Hot on the heels of this decision, legal action has now commenced in the UK, with Uber drivers arguing that the company is depriving them of their employment rights by deeming them to be self-employed contractors.

Employment status is of course important because an individual’s legal rights and the associated level of protection depend upon which category of employee, worker or self-employed contractor they fall into. Employees plainly enjoy the most comprehensive benefits and protection, but workers are also entitled to significant rights including the national minimum wage, holiday pay and health and safety at work protection.

This case threatens the very heart of Uber’s business model. Maintaining that its drivers are self-employed contractors, rather than employees or workers, has allowed Uber to sidestep significant financial overheads.

The test for employment status is far from straightforward but, in essence, the key determining factors are:

  • Control – the less control exercised by the “employer” the more likely the individual is a self-employed contractor. This was of fundamental importance in the US decision, where it was emphasised that Uber exercises a high level of control, for example requiring its drivers to follow particular routes, dictating how much passengers are charged, and using a rating system to assess driver performance.
  • The frequency of pay – self-employed contractors are less likely to receive a regular, consistent wage. Uber drivers do not receive a regular wage: instead their earnings are based on the number of journeys which they complete.
  • Mutuality of obligation – i.e. the obligation on the “employer” to provide work and the obligation on the individual to accept it. Where an “employer” is not required to offer work and an individual is not required to accept it, a self-employed contractor relationship is more likely to exist. In the case of Uber, there is no obligation on the drivers to accept work and in turn no guarantee from Uber that drivers will receive a particular amount of work.
  • Exclusivity – a self-employed contractor is able to work for multiple companies. Uber drivers are able to, and often do, work for other taxi companies or use Uber as a means to top up income from another sector.
  • Who supplies the vehicle – a self-employed contractor is more likely to provide their own car and other equipment. In Uber’s case, drivers are either able to provide their own vehicle  (subject to it complying with various standards set by the company), or Uber is able to assist drivers with sourcing a vehicle with the financing costs subsequently being deducted from their earnings.

To me it looks on the face of it as though many (but not all) aspects of Uber’s relationship with its drivers certainly lean towards the self-employed contractor end of the scale. Instinctively, that makes a lot of sense. This is a line strongly taken by Uber, which claims that it merely provides its self-employed drivers with a platform for connecting with potential customers and carrying out a private transaction with them for which they are paid directly. However, this will need to be weighed up against the other aspects of the relationship which seem to swing the other way, namely the extent of the control exercised by Uber.  

From what the media seems to be saying, UK Uber drivers are claiming that they should be afforded worker rather than employee protection. The bar for worker status in employment law is lower than that required for employee status. An individual is required to show that they have a contract for personal services with the “employer”. What this means in essence is that the individual in question has to perform work personally rather than sending a substitute to conduct the work in question. This may be a trickier one for Uber to get over.

The case will ultimately turn on its specific facts, but it will be interesting to see the arguments run by the UK drivers as the litigation develops. What is clear is that if the case goes against Uber, the floodgates will be well and truly open for similar challenges to be made against other companies that provide platforms connecting self-employed contractors and consumers. At present, I think it’s certainly fair to say that where the boundaries lie in employment status is Uber confusing…

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