October 31, 2016
There is a well known legal maxim that hard cases make bad law. Last week’s much publicised ruling by the employment tribunal in the claim against Uber – which has been hailed by the GMB union as a “monumental victory” for workers’ rights – is one such case.
It’s not difficult to understand why the tribunal felt that Uber drivers, some of whom spend most of their waking hours contributing to the bank balance of what is already a multi-billion dollar business, deserve some of the basic statutory worker rights that most of us enjoy. But being deserving of something and being legally entitled to it are two very different things. In its attempt to arrive at what it obviously regarded as a fair outcome, it would appear that the employment tribunal lost sight of this crucial distinction.
In short, the tribunal found that, contrary to Uber’s assertion that its UK network of 40,000 drivers are self-employed contractors, they are in fact ‘workers’ and therefore entitled to certain statutory rights including the national minimum wage, paid holiday, rest breaks and potentially pension contributions. In reaching this conclusion, the tribunal placed a great deal of emphasis on the fact that Uber exercises a high degree of control over how its drivers operate. For example, it found that the company interviews and recruits drivers; it fixes and collects the maximum fare for each trip; it sets the default route for each trip; it controls key information such as the passenger’s contact details and intended destination; it imposes numerous conditions on drivers such as the limited choice of acceptable vehicles; and it operates a rating system for its drivers which effectively works in much the same way as a performance management/disciplinary procedure. The tribunal was particularly dismissive of the written terms and conditions operated by the company, which it described as an excellent illustration of “armies of lawyers” contriving documents in their clients’ interests which simply misrepresent the true rights and obligations on both sides.
Even if all that were true, what the tribunal appears to have overlooked is the fact that one of the key elements of the definition of ‘worker’ in s230(3)(b) of the Employment Rights Act 1996 is that the individual must be subject to a contract whereby they “undertake to do or perform personally any work or services…”. In other words, they must by under some form of contractual (i.e. legally enforceable) obligation to provide their services. If they are not, they cannot come within the statutory definition.
This is where the tribunal’s analysis is somewhat lacking. It was an undisputed fact that Uber drivers are never under an obligation to switch on the App, meaning that they are entirely free to decide for themselves whether or not to do any work at any given time. Quite correctly, the tribunal acknowledged that this meant that there could be “no question” of any contractual obligation to provide driving services while the App is switched off. But it went on to find that this changes as soon as the driver switches on the App, he is within the territory in which he is authorised to work and is willing and able to accept assignments. The tribunal found that, if these conditions are satisfied, the analysis is different. The implication is that the driver becomes subject to a contractual obligation to work in this situation. Indeed, the judgment includes a finding that “Uber requires drivers to accept trips and/or not to cancel trips“.
The problem is that this finding is difficult to reconcile with the evidence before the tribunal. The only evidence that the judgment mentions is an Uber document that states that drivers should accept at least 80% of trip requests to retain their account status along with evidence to the effect that drivers who decline three trips in a row are liable to be forcibly logged off the App for 10 minutes.
It is of course possible that this causes some drivers to feel pressured to accept work whilst they are logged onto the App. It is also possible that some drivers may feel that they have to keep the App switched on in order not to lose out on the ability to continue earning money. But that is not the same thing as being under a contractual obligation to work. Regardless of the practical realities, the fact remains that, provided they complete any trips they have already accepted, Uber drivers are legally entitled to switch the App off and stop working whenever they choose. This is simply inconsistent with the notion that they are under a contractual obligation to work whilst they are in between jobs. As a result, it is difficult to understand how they can come within the statutory definition of ‘worker’ to the extent suggested by the tribunal.
One thing that is obvious from the written judgment is that the tribunal did little to hide its disdain for Uber’s position. The fact that it is a large international business almost certainly did not count in its favour. But the fact that Uber may be in a position to afford a bit of holiday pay should make no difference to the legal analysis.
Of course, this is not to say that Uber drivers and other workers in the so-called ‘gig’ economy do not deserve more employment rights than the law currently gives them. However, that is a decision for Parliament to make and, if necessary, change the law to ensure that they are adequately protected. It is not the place of employment tribunals to interpret the law in a way that is designed to plug gaps in the legislation.
Uber has already indicated that it intends to appeal and it will be interesting to see whether the tribunal’s decision withstands the scrutiny of the Employment Appeal Tribunal. The decision has certainly already sparked significant interest and will continue to be scrutinised, particularly by the many technology companies who already utilise (or are developing) similar applications aimed at connecting the suppliers of services with customer demand. Regardless of whether or not the tribunal applied the law correctly in Uber’s case, it is crucial that these businesses consider the potential legal ramifications of their applications at an early stage to ensure that they are clear on the correct legal status of those who they deal with.
If the Uber decision is overturned on appeal, many will no doubt argue that it’s an example of bad law making hard cases. But at least that’s something that can be easily fixed by the government. That’s preferable to hard cases making bad law.
To access the Employment Court’s judgment, please click here.