Uber, the ride hailing app, has appeared in a London Employment Tribunal after two of its drivers challenged their employment status with the company. Whilst no stranger to litigation, this is the first time the employment status of Uber’s ‘driver-partners’ has been questioned in a UK tribunal or court.

The challenge relates to Uber’s classification of much of its workforce as self-employed. The two drivers, supported by the GMB union, are arguing that they are in fact ‘workers’. This classification would grant the drivers certain employment rights not afforded to self-employed contractors.

Uber connects customers to drivers through its smartphone app which provides navigational support to drivers and charges customers for their journey. Uber subsequently pays its drivers a proportion of the journey fee. The growth of the business – two million Londoners are now users – has been aided by its ability to build a large self-employed driver workforce, thereby avoiding the costs and other requirements of employment relationships. However, how a relationship is labelled is not decisive of its real legal status.

Employees, workers and the self-employed

UK employment law has evolved to produce three general categories of employment status; employee, worker and self-employed. ‘Employee’ status grants the most comprehensive rights to the individual, ‘worker’ operates as a mid-tier status affording less but still significant protections to the individual and self-employment offers few work related protections.

The key elements of an employment relationship are personal service, mutuality of obligation and control.

Whilst the status of employee and worker are both defined in the Employment Rights Act 1996 it is settled law that the actual status of an individual is determined by a multiple test taking into account a number of factors. The key elements of an employment relationship are personal service, mutuality of obligation and control.

The case brought by the two drivers against Uber is premised on the significant amount of control that Uber apparently exerts over its workforce in respect of the hours that they work and what they can earn. Allegations of fixed routes and penalties for failing to accept jobs point towards some degree of control exercised through the mobile app. If successful, the two drivers would be entitled to significant worker benefits including minimum wage, holiday, pension auto-enrolment and protection from discrimination, dismissal and detriment due to part time status or whistleblowing.

Successful claims against Uber are also likely to open the floodgates to similar claims against other companies that categorise their workforce as self-employed or which operate innovative business models that stretch established concepts of working arrangements. Courier companies, such as Deliveroo and Hermes, have recently been in the press concerning the status of their workforces, with Deliveroo apparently amending their contracts with drivers to deter claims.

However, the potential for further claims relating to employment status is almost inevitable with apparently 4.6 million people, or 15% of the UK workforce, categorised as self-employed.

A political twist

The government has taken some steps to progress clarity on the issue of employment status, commissioning reports from the Office of Tax Simplification and Julie Dean, CEO and Co-Founder of The Cambridge Satchel Company on the subject. However, the government has yet to respond to the findings of either report.

Even once the political situation settles there is still likely to be uncertainty in some situations on the question of employment status.

Theresa May has recently pledged to curb irresponsible business practices, whilst there appears to be intention at EU level to confront the issue through the establishment in May this year of a ‘Platform’ to deal with undeclared work including false self-employment. The impact of any EU steps on the UK labour market is unknown, pending the outcome of Brexit negotiations.

Even once the political situation settles there is still likely to be uncertainty in some situations on the question of employment status. Businesses wishing to stand the best chance of categorising a member of staff in a particular way should carefully consider all aspects of the working relationship. The starting point is always the written contractual arrangement with the individual concerned but day-to-day  arrangements will also be relevant, and sometimes the determining factor.

Sarah Ozanne, Of Counsel, CMS Cameron McKenna

Finlay McKay, Partner, CMS Cameron McKenna