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UK HR E-brief - Uber loses appeal against ruling that drivers are entitled to minimum wage and holiday pay

  • United Kingdom
  • Employment law - HR E-Brief

10-11-2017

The Employment Appeal Tribunal has today upheld a tribunal’s ruling that two Uber drivers who brought test cases against the company were ‘workers’ and were therefore entitled to holiday pay and to be paid at least the National Minimum Wage while working.

In UK law, having ‘worker’ status is a passport to a range of employment rights such as the national minimum wage, holiday pay and access to a pension scheme, although the full array of employment rights, including statutory sick pay and protection against unfair dismissal, is reserved for the narrower category of workers commonly referred to as ‘employees’.

For a non-employee to qualify for worker status there will usually have to be a contract between the individual and the ‘employer’ under which the individual undertakes to do work personally, and the ‘employer’ must not be a client or customer of a business operated by the individual.

The EAT ruled today that the tribunal was entitled to find that those conditions were satisfied on the facts of the case. It followed that the drivers had made out their case for worker status. In particular, it found that the tribunal was entitled to reject the description of the relationship between Uber and the drivers in the written contractual documentation. Instead, the reality of the situation was that the drivers were incorporated into Uber’s taxi business and subject to controls that pointed away from their working in business on their own account in a direct contractual relationship with the passenger each time they accepted a trip. The EAT confirmed that the tribunal had been entitled to consider the true agreement between the parties was not one in which Uber acted as the drivers’ agent.

Comment

Today’s decision is far from being the final word on this matter, however. Uber will undoubtedly look to bring a further appeal and it is conceivable that the case could go straight to the Supreme Court, to be heard alongside an appeal in a similar case against Pimlico Plumbers in February.

In the meantime, the fact that the Uber claimants have won their claim for worker status does not mean that cases brought by others who work in the on-demand economy will inevitably meet with the same success. Indeed it is notable that the tribunal that heard the case originally said it did not doubt that Uber could have, in principle, created a business model that did not involve the drivers having worker status. Each case will depend on the specific terms and arrangements between the individual and the company they work for.  Nevertheless other firms who rely heavily on the ‘on demand’ freelance workforce will be watching cases like this keenly for any emerging trends that could have a significant impact on their business model. In particular, such employers should conduct a review to assess the potential risks of misclassifying the status of their workforce, including the affordability and practicability of paying statutory minimum wage, pension auto-enrolment and holiday pay entitlements, as applicable. In addition, those businesses utilising IT platforms to exercise significant control over ‘on demand’ workers should be aware of the potential challenge in maintaining that such workers are genuinely self-employed, as opposed to one based on worker status (although it will always depend on the circumstances).

Finally, this judgment follows similar successful worker claims involving motor and cycle couriers, drivers and foster carers. This has led some to argue that the Taylor Review’s recommendation to redefine worker status in law is unnecessary and even unhelpful. The Government’s response to the Review is imminent.

Read the decision here

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