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Another Unsuccessful App-eal

Within the gig economy, determining who is an employee, who is truly self-employed and who is a ‘worker’ (a category that bestows the right to paid holidays and to be paid the minimum wage but without the other rights granted to full employees) has been an issue that has vexed the courts for several years.

The very term ‘gig economy’ surely conjures up an image of the Uber driver: driving their own vehicles, free to choose their hours of work, free (to a lesser degree) to refuse work. The whole system is dependent on the very sophisticated software delivered through apps downloaded onto the phones of both the driver and the passenger.

In 2015, it was through the app that the company communicated a change to its terms and conditions it had with the drivers. Within those terms, Uber BV was meticulous in stating that its drivers were not working for the company, rather (they said) they were customers of Uber whose primary role was the generation of income leads; they contended they did not direct the work of the drivers. One issue of note here is that because the amended terms were communicated through the drivers’ phones, they had to be accepted by the drivers to enable them to continue to work. They were non-negotiable and, furthermore, the parties were in an unequal bargaining position.

In robust terms, the majority of the Court of Appeal rejected Uber’s description of the relationship between the company and the drivers, referring to Uber’s characterisation of the relationship as having “an air of contrivance and artificiality” about it when it suggested it was not a provider of transportation services. In applying the reasoning of the Supreme Court in Autoclenz Ltd -v- Belcher, the Court of Appeal stated that the Employment Tribunal had been correct to disregard the written terms if they did not reflect the reality of the situation, and in this regard the drivers were providing services to Uber. They were not customers of Uber.

The idea that the courts can disregard written agreements between parties is contrary to most commercial practice and may appear alarming to businesses who rely on flexible working arrangements, but that would be a misreading of this decision. In an employment context, a court will only interfere with a written agreement if it is essentially a sham. It is notable in this case that two judges in the Court of Appeal agreed that the Employment Tribunal had identified sufficient facts to conclude that Uber’s written terms with the drivers did not reflect the reality of the situation, but the third judge was not persuaded that the Employment Tribunal’s findings of fact were sufficient for it to conclude that the agreement was a sham.

What should you be doing now?

For any business engaging individuals on a self-employed basis it is worth reviewing the situation to ensure that the terms on which they are engaged reflect the reality of the relationship.

What does this mean for your business?

The fact that the Court of Appeal did not reach a unanimous decision in this case reiterates how fact-sensitive these situations are. However, it is clear that a business cannot rely solely on a written agreement, however well drafted it may be. There needs to be a true analysis of the work undertaken and not an overreliance on the way the parties describe themselves.

Recommended Reading
A link to case can be found HERE.


These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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