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Uber judgement

29 January 2017 by Lydia Newman

Employment law: Uber judgement - read more

A first of its kind case for self-employed contractors, shared parental leave and May’s Review

Readers cannot fail to have noticed the press coverage concerning what is likely to be one of the most important decisions in employment law, when, in October 2016, an Employment Tribunal delivered its judgment on the employment status of Uber drivers.

Uber, founded in the USA in 2009 and now based in the Netherlands, has more than 30,000 drivers in the UK. Customers contact drivers via the Uber app and in return for brokering the relationship between the driver and passenger, Uber reportedly takes 25% of the fare.

The Tribunal held that the drivers who brought the test cases were ‘workers’, not self-employed, within the meaning of the Employment Rights Act 1996. As a result, the Uber drivers are entitled to a range of employment protection including paid annual leave, statutory sick pay, the rules relating to the 48-hour maximum working week, the national minimum wage and legal protection when whistleblowing.

Importantly for Uber, the Tribunal did not hold that the drivers were employees, which would have provided an increased level of protection including, most importantly, unfair dismissal protection.
The Tribunal found that it was ‘unreal to deny that Uber is in business as a supplier of transportation services’. The Tribunal criticised Uber for rebutting the issues raised by the claimants, even quoting Hamlet: ‘The lady doth protest too much, methinks’.

The first of its kind

Uber is set to appeal the decision and maintains that its drivers are self-employed contractors, not workers or employees. The case is the first of its kind to determine a set of circumstances as those that applied to the Uber drivers and it remains to be seen whether the Employment Appeal Tribunal takes a different approach, possibly with reference to how technology (i.e. Uber) can bring two parties together (driver and passenger) without necessarily creating employment relationships between one party (a driver) and an operator or owner of technology (Uber).

Although the Uber drivers’ case was decided on its own particular set of facts and is unlikely to present most ‘typical’ organisations, the Judgment is a salutary tale of what employment lawyers have been telling clients for years: it does not matter so much as to what your contractual documentation says (though this is clearly highly relevant), it is what happens in practice that really matters.

Any organisations with self-employed contractors carrying out services should be aware that the test as to whether or not a self-employed contractor is genuinely self-employed or a worker is not solely dependent upon the labels attributed to the relationship. Rather the crucial issue is how the relationship between the organisation and the individual plays out in practice, in particular the level of control the organisation has over the individual.

Knock-on effect

It is also worth remembering that this Tribunal decision is not binding on other Employment Tribunals (though it is persuasive) and we must await an appellate authority before the full impact of the Judgment is known. If upheld, it is likely to result in a huge number of similar claims being presented by individuals who ‘work’ for companies that have similar business models to Uber, such as Hermes and Deliveroo (the latter of whom have similar cases already pending in Tribunal).

It is also likely that even before the outcome of any appeal is known, a significant number of claims will be presented to Employment Tribunals with a request for them to be stayed pending a decision from the Employment Appeal Tribunal. In the case of Uber, this is likely to be a significant issue considering the number of drivers waiting in the wings.

Shared parental leave

Following earlier reports of the impact on the new Shared Parental Leave Regime, the first authority dealing with the new regulations has been reported, 18 months after their introduction.

In Snell v Network Rail, it was held that a father was entitled to compensation (in the region of £30,000) following his successful argument that his employer’s decision to award enhanced pay to mothers but only statutory pay to fathers and partners (who were more likely to be male) was indirectly discriminatory on the grounds of sex.

Although perhaps not surprising, the case − only a first instance decision, which may be appealed − is a reminder to employers that sometimes decisions to enhance pay, usually for what are positive reasons, can have a negative impact on other groups.

An adverse impact of this Judgment could be a decision for companies who identify similar issues to reduce enhanced pay to statutory levels so as to avoid any risk of a finding similar to that which applied in Snell – one would hope that this unintended consequence is limited in scope.

Employment Law Review

Theresa May announced in October that the Government will launch an employment practices review to ensure that ‘employment regulation and practices are keeping pace with the changing world of work’, stating that the Government will enhance, not just maintain, workers’ rights. Matthew Taylor will lead the review, focusing particularly on job security.

Lydia Newman is an Employment Solicitor

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