It has been a busy few weeks for the definition of “employment status” with two important decisions being issued on the status of individuals working within the growing “gig economy”. The first decision was a decision in the Employment Appeal Tribunal (EAT) about the employment status of Uber drivers and the second was a decision in the Central Arbitration Committee (CAC) about the employment status of Deliveroo riders.
Just under a month ago, Uber lost its appeal against the decision of the London Central Employment Tribunal that Uber drivers were workers rather than self-employed contractors. A week later, the CAC decided that a group of Deliveroo riders were not workers.
These two decisions appear, on the face of it, contradictory but is this the case and what do these cases tell us about the definitions of employment status?
The Uber case
Uber was founded as a smartphone app through which the public book taxi services and has now grown into a “modern business phenomenon” with around 30,000 Uber drivers in London alone (40,000 across the UK as a whole).
The case was brought by named Uber drivers and supported by the GMB union as a test case. The drivers argued that they were workers and therefore should be entitled to the rights and entitlements of a worker including a right to annual leave, rest breaks and the national minimum wage. Uber argued that the drivers were self-employed contractors and that Uber acted as agent for the drivers in putting them in touch with customers.
The Employment Tribunal concluded that the drivers were workers. The Employment Tribunal carried out an analysis of the contractual situation and the day-to-day reality of the working relationship. The Employment Tribunal found that, although there were contractual documents between the drivers and Uber B.V. (the parent company for Uber UK and not a named respondent in the proceedings) that set out an agency relationship, this was not the reality of the working situation. The reality of the working situation was, instead, that Uber had significant control over the drivers that were appointed and the way in which they worked. It was concluded that due to the unequal bargaining position between the drivers and Uber, that the contractual position was not determinative.
In making this decision the Employment Tribunal took specific account of the circumstances including that Uber:
- Requires drivers to accept trips and not to cancel trips;
- Logs off drivers who breach the requirements;
- Sets the route a driver takes and the driver sets a different route at his peril;
- Sets the fare and the driver cannot agree a higher sum;
- Imposes numerous conditions upon the driver; and
- Subjects the drivers to a performance management system through the ratings system.
The EAT upheld the Employment Tribunal’s decision finding that it had considered the factual situation and was entitled to find that the drivers were workers.
This decision is clearly of great importance to Uber, with approximately 40,000 drivers who may well now be able to claim additional rights and benefits including minimum wage, rest breaks and paid holidays. Just over a week ago, Uber submitted a petition to appeal directly to the Supreme Court – 'leapfrogging' the Court of Appeal – in an attempt to overturn the EAT's decision however, their application has since been refused and the appeal will now be heard by the Court of Appeal sometime next year.
The Deliveroo case
Deliveroo is a business that arranges for deliveries of food and drinks from restaurants and takeaways to customers’ homes or offices. Deliveroo contracts with the restaurant or takeaway and enters a separate agreement with individuals to deliver this food or drink. Many of the individuals who undertake the deliveries do so by bike and Deliveroo refers to them as the “Roo community” and “Roomen” and “Roowomen”. Deliveroo has approximately 10,800 riders engaged in this delivery service.
The issue of the employment status of Deliveroo riders came before the Central Arbitration Committee (CAC). This was part of an application by the Independent Workers Union of Great Britain (IWGB) union to be recognised as a trade union for the purposes of collective bargaining by Deliveroo. One condition that needed to be satisfied before the CAC could find that the IWGB union were recognised by Deliveroo was that those they represented, being the riders, needed to have the status of “workers”.
In this case, the CAC considered the contractual position and what happened in practice. The CAC considered whether the riders had an obligation to provide work and whether they were required to provide personal service. In this case both Deliveroo and the Union accepted that there were contracts between the riders and Deliveroo and that the contracts were legally binding. The CAC started with an analysis of these contracts. The contracts stated that the riders had the right to appoint another person to work on their behalf at any time. This was referred to as the “substitution right”. They considered what happened in practice and found that this was a genuine right and was used by some (although a minority) of riders. On this basis, the CAC concluded that there was no personal service between the rider and Deliveroo and as such the riders could not have “worker status”.
There are a number of claims brought by other named riders in the Employment Tribunal on the issue of worker status. These are due to be considered in July 2018. Solicitors representing these riders have stated that it does not consider that the CAC decision will prevent these claims as, they claim, Deliveroo riders are dealt with differently depending on the area within which they work and the CAC decision concerned riders in Camden and Kentish Town only. It will be interesting to see how this case progresses.
Conclusions that can be drawn
Whilst on the face of it these decisions may appear to be contradictory, this is not in fact the case. They do, however, highlight the complexity of this area and the weight that is given to the circumstances in each individual case. The CAC in the Deliveroo case stated that the factual situation for the Deliveroo riders was very different to that of the Uber drivers.
Before these cases it was recognised that there were complexities in this area and the Government commissioned a review into working practices in the UK. This review is called 'Good work: The Taylor Review of Modern Working Practices' and it recommended that “worker status” should be re-named “dependant contractor” status and that additional legislative guidance should be given on the definition to reduce uncertainty in this area.
This review has now been considered in a joint inquiry by the House of Commons Work and Pensions and BEIS Committees. Their review makes 11 recommendations including; a more detailed statutory definition of employment status, a presumption of worker status and a premium payment for non-guaranteed hours. It remains to be seen whether any of the recommendations will be introduced into law. Commentators are split as to whether additional statutory guidance would be helpful in this area, some argue that the issue of employment status is necessarily fact specific and limiting the discretion of the Employment Tribunal in these cases may be detrimental.
The key advice at present is to consider each case on its own circumstances and in particular to consider the following:
- The full circumstances of the contract and working situation;
- The level of equality in the bargaining position between the employer and the individual;
- The ability of an individual to genuinely assign the work to another; and
- The degree of control exerted over the individual by the “employer”.
In addition, organisations should ensure that all contracts are clearly drafted and followed in practice.
After studying law at Cambridge University, I trained at leading national law firm Mills & Reeve, qualifying into their employment team in 2002. I have extensive employment law experience, gained through advising both employers and employees on a wide range of issues, across an array of sectors – including but not limited to finance, education, hospitality, transport and retail. This diverse experience means I am ideally placed to provide advice in relation to professional conduct and regulatory matters.
I am now a senior solicitor at ESP Law, part of ESP Group – a very different employment law firm and HR consultancy business, with our own in-house legal and HR experts. Taking pride in our reputation for delivering sensible, straight-talking and practical advice – at the same time as being approachable and supportive – I am passionate about the way ESP works with its customers. By building on trusted relationships and providing prompt support at the earliest stage of any issue, we help ensure that sound commercial decisions are taken.
The vision for our business was to deliver an exceptionally personal, yet cost-effective service that truly meets the evolving needs of modern and forward-thinking HR teams and their organisations. I’m lucky to be among a team of very talented employment lawyers who work hard day in, day out, to make this vision a reality.