Employment Tribunal Case No. 2202550/2015 & Others

An employment tribunal in the UK ruled recently that a number of Uber drivers in the UK were employees and not independent contractors. The Uber case highlights the complications for companies whose business model is based on engaging independent contractors, which are often viewed as a way to reduce costs.

Background

Uber is an on-demand taxi service where people can hire a private driver using an online application or booking forum. It was founded in 2009 and operates in more than 450 cities in more than 70 countries. There are estimated to be 40,000 Uber drivers in the UK.

A number of Uber drivers in the UK (including Mr Farah and Mr Farrar) had filed a case against Uber for failure by Uber to pay them the national minimum wage and paid rest breaks, among other statutory entitlements. Uber argued that the drivers were not employees or workers (there is a distinction in the UK, unlike Ireland) and were in fact independent contractors. Therefore Uber was not obliged to provide the drivers with any benefit that they would have been entitled to under statutory employment rights.

Uber and the drivers had entered into written contracts where they were described as independent contractors. However the UK Tribunal looked behind these labels to ascertain the degree of exercise and control that Uber had over the driver’s working arrangements. The following factors were considered:

• Uber is described as the “agent” in the contract; however it reserves “sole and absolute” discretion to decline bookings.
• Uber interviews and recruits its drivers.
• Uber controls information on the driving job such as the client contact details and the destination.
• Drivers are penalised if they don’t accept at least 80% of the trips requested by logging them off the system for a period.
• Uber sets out the route for the driver by way of a suggested route (and drivers are penalised where they don’t follow the suggested route). For example if drivers refuse three trip requests in a row, they are penalised.
• Uber fixes the fare charged to the passenger and handled complaints. If there were refunds due, Uber dealt with these without reference to the Uber driver.
• Uber instructs drivers how to do their job
• Uber has a rating system for performance and if satisfactory customer ratings are not achieved the drivers can be removed from the Uber driver panel.
• Uber drivers were not afforded an opportunity to grow their businesses, aside from additional driving hours.

Decision

The UK Tribunal ruled that Uber had significant control over the activities of the drivers and therefore they were workers of Uber and entitled to certain employment related statutory protections. Uber has indicated that it will appeal the decision. This case has potential wider implications for not just Uber but other companies engaged in similar types of contracting arrangements.

Presently, in Ireland disputes involving Uber are not as relevant as the regulations currently only allow Uber users to engage licenced taxi drivers and chauffeur-driven cars. This regime itself may be subject to challenge however. Furthermore the decision of the UK court is not binding on future decisions in Irish courts but it may have a persuasive effect.

Full judgement is available at from:

https://www.judiciary.gov.uk/wp-content/uploads/2016/10/aslam-and-farrar-v-uber-reasons-20161028.pdf