Uber has always classified the drivers who work through its platform to be self-employed, and did not consider them entitled to the minimum rights which accrue to workers or employees.

Last week, the Central London employment tribunal decided a test case brought against Uber by two Uber drivers with the support of the GMB union. The drivers claimed that Uber’s classification of its drivers as self-employed is wrong and that its drivers should be entitled to the basic rights enjoyed by workers in the UK.

The employment tribunal found in favour of the two Uber drivers. It decided that when drivers are logged into the app, and are willing to accept assignments from Uber, they are in fact working for Uber as workers within the meaning of the UK’s employment legislation. This means that they qualify for worker’s rights, including among other things the right to national minimum or living wage, paid annual leave, rest breaks and a cap on maximum weekly working hours, whistleblowing protection, and auto-enrolment pension contributions.

The key questions in determining the issue of worker status are the of level of control which an organisation exercises over its staff and whether the individual is providing its services to the organisation as a customer or client. The employment tribunal made various findings about the nature of Uber’s relationship with its drivers, including, in particular, that Uber was not a client or customer of business undertakings run by the individual drivers but rather thatthe drivers are recruited and retained by Uber to operate its transportation business.

The tribunal found that Uber compelled drivers to agree with its description of itself and its analysis of the legal relationships, requiring drivers and passengers to agree as a matter of contract that it does not provide a transportation service. However, the tribunal reviewed evidence of phrasing used by Uber which reinforced the claimants’ case that it runs a transportation service. For example, it referred to booking ‘interviews’ for drivers and ‘providing job opportunities’ to people, drivers being ‘on-duty’ and ‘off-duty’, and referring to the drivers as ‘Uber drivers’ or ‘our drivers’ and to the cars as ‘Ubers’.

The tribunal said that to deny Uber is a supplier of transportation services is ‘unreal’. The driving services are not provided by the individual drivers directly to the passengers; in fact, they are forbidden from doing so by Uber’s contractual terms. The marketing is for the benefit of Uber’s name and to sell its transportation services. Uber does not supply drivers with ‘leads’, because drivers ‘do not and cannot negotiate with passengers…They are offered and accept trips strictly on Uber’s terms.’ Its case that there is a purported driver-passenger contract is ‘pure fiction which bears no relation to the real dealings and relationships between the parties.’

With regard to the question of control and whether the drivers provided personal service to Uber, the tribunal found that Uber exercises a great degree of control over its drivers.

The decision in this test case has wide implications, not only for other Uber drivers but also for those who are engaged – in what is known as the ‘gig economy’ in the United Kingdom – by companies such as Deliveroo or Taskrabbit. Many individuals working in the gig economy do not fit comfortably into the traditional categories of being an employee or being self-employed. Rather, they sit in a continuum between these opposing poles, with varying degrees of flexibility, and subject to varying degrees of control. The issue now is how the rise of this new strain of worker and the risks of exploitation are best dealt with at law and by the tax authorities.

It is almost certain that Uber will appeal the decision of the employment tribunal; equally it is almost certain that leave to appeal will be granted, given the fundamental nature of the concepts being argued over. The uncertainty in this area will persist for some time yet. Nonetheless, employers who operate in the gig economy, or who rely on the self-employed nature of their workforce, should note this important decision.

Sarah Ozanne, employment lawyer, CMS cameron McKenna