Blog: Is it over for the Gig Economy? Uber Drivers gain workers’ rights

By Eric Gilligan, partner, Stronachs LLP

A London Employment Tribunal on Friday issued a judgement which could have wide-reaching implications for the so-called “gig economy”, whereby individuals and businesses engage on a short term, flexible basis. It has been argued that this model involves exploitation. The Tribunal ruled that two drivers who provided services to Uber were “workers” for the purposes of UK employment law and not self-employed with significant implications for their rights and protections. The legal definition of “worker” involves an obligation on an individual to personally perform work for another party to a contract whose status is not that of a customer of a business carried on by the individual. A key aspect of the status involves the degree of control involved in that relationship.

Uber’s written agreement with the drivers treated them as self-employed and it argued that its business model and associated “app” merely operates to facilitate leads for drivers, and that it helps each individual driver to grow their own business. Uber argued not that it was a customer of the drivers but that it was merely acting as an agent for them entering into contracts with customers or “riders” wanting their services.

The tribunal, in a scathing judgement, found that the terms of the written agreements in place were so different from the reality of the relationship that it was free to disregard them. In particular it took into account the fact that Uber interviews and recruits its drivers, requires drivers to accept and not to cancel trips, fixes the fare, handles passenger complaints and subjects drivers to performance reviews via a customer rating system. It also controls the key details of customers and does not give the driver access to these, and requires drivers to work in certain ways, for instance by suggesting routes and limiting their choice of vehicles. This was sufficient to confer worker status. The Tribunal stated that the problems of status stemmed from the unequal bargaining position of the parties, pointing out that many Uber drivers did not speak English as a first language and were not used to interpreting the “impenetrable prose” of the Uber documents which misrepresented the true rights and obligations on both sides.

Although workers do not have the full protections that are afforded to employees, (such as the right to claim unfair dismissal) they do have a number of important employment rights, including the right to 5.6 weeks of paid annual leave per year, a maximum 48 hour working week with rest breaks, protection under whistleblowing legislation, pension rights and the right to the National Minimum Wage.

The judgment has potentially wide ranging implications for other operators in the gig economy where business is driven by flexibility and avoidance of unnecessary cost. This includes the likes of Deliveroo, and Hermes which purport to use self-employed contractors rather than workers. While Uber has already indicated the judgement will be appealed, businesses which rely heavily on individual contractors should consider carefully whether their arrangements in practice are consistent with their written agreements and whether they are complying with their obligations to the individuals involved.