The decision made Uber liable for paying the drivers the UK’s national minimum wage, as well as holiday pay and providing work breaks.
It also opened the company to further legal challenges on employment status by other Uber drivers — threatening a business model which has been structured not to have to take on the expense and admin burden of thousands of workers’ rights. (Uber claims to have some 40,000 drivers in London.)
The company appealed the ruling, hence being back in court now.
If the employment appeal tribunal backs up the original tribunal’s ruling it could have major implications for Uber’s business model, according to Anna McCaffrey, senior counsel in the employment, pensions and mobility group at law firm Taylor Wessing.
Though she also noted there are further rounds of appeal open to Uber should this appeals tribunal decide against them — such as going to the UK’s court of appeal.
“If on the first appeal at least the drivers are still found to have worker status then I think… Uber would have to decide how they deal with that and how they accommodate that into their model,” she told TechCrunch.
The ride-hailing giant, which last week was dealt a major blow when London’s transport regulator announced it was withdrawing its operator license after judging the company not “fit and proper” to operate private hire vehicles, has shifted the gears of its argument for this appeal.
So where it previously — and unsuccessfully — tried to argue it was just a technology platform connecting self-employed drivers with riders, it is now saying it is acting as an agent on the driver’s behalf, likening its operation to that of a traditional minicab operator, such as the long-running London private hire vehicle operator Addison Lee.
“The position of drivers who use the app is materially identical to the (familiar and long-established) position of self-employed private hire drivers who operate under the auspices of traditional minicab firms,” is how Uber sets out its argument in its court submission (via Reuters).
“They’re specifically saying they’re not an example of the gig economy and… they say they’re acting as the drivers’ agent,” confirmed McCaffrey. “So essentially it’s just a new way of adopting the traditional model of old fashioned minicab firms.
“And if that’s true and they are just an agent then their argument goes that therefore they’re — essentially the drivers are their clients.”
“It’s not that they’ve just dropped their whole entire previous position. They are criticizing how they think the original tribunal misinterpreted their contracts,” she added. “So they’re still relying on the same basic contractual principles and documents they were the last time.
I don’t think there’s going to be a return to suddenly finding people are self-employed again.
“It’s maybe that the general tone of their arguments now is, quite surprisingly, that they’re not part of the gig economy and actually they’re much more of a traditional outfit than perhaps the first time round their arguments were based on.”
However McCaffrey also noted that another similar UK employment tribunal recently ruled against Addison Lee over the employment status of drivers. So it’s not clear how much legal wiggle room there is for Uber to make this argument either.
“I think it’s an interesting approach,” she said of Uber’s argument. “And there is some basis to support it. If you look at what we know about the arguments they tend to put forward at employment tribunals so far they have been well thought out and there’s some factual basis for them.”
But she also pointed out a wide margin for rebuttal — given Uber’s previous argument that it also offers services to customers, and has the ability to set and change end prices in a way that can be seen as beneficial to Uber users (rather than to Uber drivers).
“I think what’s trickier, though, and what the rebuttal from the drivers’ lawyers is likely to say is that in a traditional agency arrangement you have an agent and a client, and here the client would have to really be the drivers — but that would usually mean you’re acting always in your client’s best interests.
“So given that offering a discount isn’t necessarily always in the drivers’ best interests on a pure financial level you can see that that doesn’t necessarily tie in with the traditional agency relationship particularly well.”
“It’s definitely a different approach from their arguments the last time, though it remains to be seen if the employment appeal tribunal thinks it’s viable or plausible,” she added.
She suggested that TfL’s decision to withdraw licensing from Uber could feed into the employment tribunal — as “relevant context”.
“The drivers’ lawyers might refer to it in terms of if one of the reasons, perhaps, that the license was loss is in relation to general corporate governance and ensuring basic levels of compliance and safety etc then they will say, probably, that actually a minimum level of workers rights should be part of any review that Uber does of its practices,” she said on that.
Asked whether she believes Uber is going to win the appeal, McCaffrey said it would be surprising if it is able to overturn the original verdict on employment status.
“I think most people would be surprised if the worker status that was found the last time was reversed,” she said, adding: “Although it is definitely possible.”
“[The tribunal] may come to the same conclusion for different reasons,” she also said. “I will be surprised if the status of the drivers has changed.”
Last year the UK government commissioned an independent review of what it dubbed ‘modern working practices’, to examine the “implications of new forms of work on worker rights and responsibilities, as well as on employer freedoms and obligations”, which reported in July — including among its recommendations the idea of creating a new classification (which it called “dependent contractors”) for workers on tech platforms, to separate them from what the reviewers’ dubbed the “legitimately self-employed”.
“‘Dependent contractors’ are the group most likely to suffer from unfair one-sided flexibility and therefore we need to provide additional protections for this group and stronger incentives for firms to treat them fairly,” they wrote in the report.
The government has yet to signal whether (and which) of the Taylor Report recommendations it might take forward. But McCaffrey’s view is that it will probably look at ways to extend national minimum wage rights to gig economy workers.
Though she also noted there are challenges the government will have to grapple with — such as finding “creative” fixes for a scenario where gig economy workers could be logged onto more than one app at a time or potentially working for more than one company during the same day.
“It’s quite hard to line that up with traditional notions of national minimum wage,” she noted. “The multi-app issue is one that’s come up before. Then you have to come up with a creative way to say how do we ensure that that person gets a fair rate of pay without necessarily creating a situation where three companies have an obligation to pay the national minimum wage for the same period of time.”
The government could therefore look at concepts of paying workers based on what they produce “as a way to try and give some fairness in relation to basic earnings” and without “unduly penalizing companies”, she suggested.
“I do think this is an area that’s going to be subject to change for the next couple of years. I don’t think there’s going to be a return to suddenly finding people are self-employed again,” she added.
In a statement about the employment tribunal appeal, an Uber spokesperson said: “Almost all taxi and private hire drivers have been self-employed for decades before our app existed. With Uber drivers have more control and are totally free to choose if, when and where they drive with no shifts or minimum hours. The overwhelming majority of drivers say they want to keep the freedom of being their own boss.”
“Last year drivers using our app made average fares of £15 per hour after our service fee. We’ve recently invested in a number of changes, including discounted illness and injury cover, paid waiting time and the ability to cash out fares at any time,” the company added.