Employment: ‘Worker’

On the facts found in the present case, the employment tribunal (the ET) had been entitled to find that the respondent drivers were ‘workers’ who worked for Uber London under ‘worker’s contracts’, within the meaning of the statutory definition (s 230(3) of the Employment Rights Act 1996). The Supreme Court (the court), in dismissing Uber’s appeal, held that that had been the only conclusion which the ET could reasonably have reached and, accordingly, it affirmed the conclusion of the Employment Appeal Tribunal, and that of the majority of the Court of Appeal, that the ET had been entitled to decide both questions in the respondents’ favour. Further, the court held that the ET had note erred in finding that: (i) periods during which its three conditions were met constituted ‘working time’ for the purpose of the Working Time Regulations 1998, SI 1998/1833; (ii) drivers’ working hours should be classified as ‘unmeasured work’, and (iii) the respondents’ working hours were not ‘time work’.

The first appellant, Uber BV, was a Dutch company which owned the rights in the Uber app. The second appellant, Uber London Ltd (Uber London), was a UK subsidiary of Uber BV which, since May 2012, had been licensed to operate private hire vehicles in London. The third appellant, Uber Britannia Ltd, was another UK subsidiary of Uber BV which held licences to operate such vehicles outside London (the appellants would, collectively, be referred to as ‘Uber’).

The respondents were, at the relevant times, licensed to drive private hire vehicles in London and they performed driving services booked through the Uber app. A test case was brought before the employment tribunal (the ET), concerning their employment status. For the purpose of the decision which had given rise to the present appeal, the ET limited its consideration to two test claimants.

At the time of the ET hearing, there were about 30,000 Uber drivers operating in the London area and 40,000 in the UK as a whole. Some two million people were registered to use the Uber app as passengers in London. Individuals approved to work as drivers were free to make themselves available for work by logging onto the Uber app, as much or as little as they wanted, and at times of their own choosing. They were not prohibited from providing services for, or through, other organisations, including any direct competitor of Uber operating through another digital platform. Drivers could also choose where within the territory covered by their private hire vehicle licence they made themselves available for work. They were not provided with any insignia or uniform and, in London, they were discouraged from displaying Uber branding of any kind on their vehicle. Drivers whose acceptance rate for trip requests fell below a set level (which according to evidence before the ET was 80%) received warning messages reminding the driver that being logged into the Uber app was an indication that the driver was willing and able to accept trip requests Uber also operated a ‘driver offence process’ to address misconduct by drivers.

Uber London handled passenger complaints, including complaints about a driver, and decided whether to make any refund to the passenger (sometimes without even referring the matter to the driver concerned). Further, before using the Uber app as drivers for the first time, the respondents were required to sign a ‘partner registration form’ stating that they agreed to be bound by and comply with terms and conditions described as ‘Partner Terms’. In October 2015, a new ‘Services Agreement’ was introduced to which drivers were required to signify their agreement electronically before they could again log into the Uber app and accept trip requests. The differences between the old and new terms were not material for present purposes.

Before the ET, the respondents claimed rights under the National Minimum Wage Act 1998 (NMWA 1998) and associated regulations to be paid at least the national minimum wage for work done, rights under the Working Time Regulations 1998 (the 1998 Regulations), SI 1998/1833, which included the right to receive paid annual leave and, in the case of two claimants, one of whom was the first respondent, a right under the Employment Rights Act 1996 (ERA 1996) not to suffer detrimental treatment on the grounds of having made a protected disclosure. Such rights were conferred by the legislation on ‘workers’.

The term ‘worker’ was defined by ERA 1996 s 230(3) to mean: ‘an individual who has entered into or works under (or, where the employment has ceased, worked under) (a) a contract of employment, or (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertook to do or perform personally any work or services for another party to the contract whose status was not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual; and any reference to a worker’s contract shall be construed accordingly.’

The ET held that the respondents were ‘workers’ who, although not employed under contracts of employment, worked for Uber London under ‘workers’ contracts’, within the meaning of limb (b) of the statutory definition. The ET further found that, for the purposes of the relevant legislation, the respondents were working for Uber London during any period when they (and other claimants) (a) had the Uber app switched on, (b) was within the territory in which he was authorised to work, and (c) was able and willing to accept assignments. In so ruling, the ET made a number of findings about standards of performance which drivers were expected to meet and actions taken where they failed to meet those standards. For example, the ET found that a ‘Welcome Packet’ of material issued by Uber London to new drivers included numerous instructions as to how drivers should conduct themselves, such as to be ‘Polite and professional at all times’, and to ‘Avoid inappropriate topics of conversation’ and not to ‘contact the rider after the trip has ended’.

The Employment Appeal Tribunal (the EAT) and the Court of Appeal, Civil Division (by a majority), dismissed Uber’s appeal against the ET’s decision.

Uber appealed to the Supreme Court.

(1) Whether the ET had been entitled to find that drivers whose work was arranged through Uber’s smartphone application (the Uber app) worked for Uber under workers’ contracts and, accordingly, qualified for the national minimum wage, paid annual leave and other workers’ rights; or whether, as Uber contended, the drivers did not have those rights because they worked for themselves as independent contractors, performing services under contracts made with passengers through Uber as their booking agent.

If drivers worked for Uber under workers’ contracts, a secondary question arose as to whether the ET had also been entitled to find that the drivers who had brought the present claims were working under such contracts whenever they were logged into the Uber app within the territory in which they were licensed to operate and ready and willing to accept trips; or whether, as Uber submitted, they were working only when driving passengers to their destinations.

On the facts found in the present case, the ET had been entitled to find that the respondent drivers were ‘workers’ who worked for Uber London under ‘workers contracts’, within the meaning of the statutory definition. That had been the only conclusion which the ET could reasonably have reached. It followed that the conclusion of the EAT, and the and the majority of the Court of Appeal, that the ET had been entitled to decide both questions in the respondents’ favour would be affirmed (see [2], [94]-[101], [119] of the judgment).

There was no written agreement between Uber London and drivers. In those circumstances the nature of their relationship had to be inferred from the parties’ conduct, considered in its relevant factual and legal context. It was an important feature of the context in which, as the ET had found, Uber London recruited and communicated on a day to day basis with drivers that: (1) it was unlawful for anyone in London to accept a private hire booking, unless that person was the holder of a private hire vehicle operator’s licence for London; and (2) the only natural or legal person involved in the acceptance of bookings and provision of private hire vehicles booked through the Uber app which held such a licence was Uber London. It was reasonable to assume, at least unless the contrary was demonstrated, that the parties intended to comply with the law in the way they dealt with each other (see [45], [46] of the judgment).

It was true that the ‘rider terms’ on which Uber contracted with passengers included a term which stated that Uber London (or other local Uber company) accepted private hire bookings ‘acting as disclosed agent for the transportation provider (as principal)’ and that such acceptance ‘gives rise to a contract for the provision to [the rider] of transportation services between [the rider] and the transportation provider’. However, it was trite law that a person (A) could not create a contract between another person (B) and a third party merely by claiming or purporting to do so, but only if A was (actually or ostensibly) authorised by B to act as B’s agent (see [50] of the judgment).

Authority could be conferred by a contract between principal and agent. It could not be said, however, that the rider terms established a contract between drivers and Uber London. There was no evidence that drivers were ever sent the rider terms, let alone consented to them. In any case, the rider terms stated that they constituted an agreement between the rider, Uber BV and the relevant local Uber company: they did not purport to record an agreement to which any driver was a party. In accordance with basic principles of contract and agency law, therefore, nothing stated in the rider terms was capable of conferring authority on Uber London to act as agent for any driver (or other ‘transportation provider’, nor of giving rise to a contract between a rider and a driver for the provision to the rider of transportation services by the driver. Once the assertion that Uber London contracted as a booking agent for drivers was rejected, the inevitable conclusion was that, by accepting a booking, Uber London contracted as principal with the passenger to carry out the booking. In those circumstances, Uber London would have no means of performing its contractual obligations to passengers, nor of securing compliance with its regulatory obligations as a licensed operator, without either employees or subcontractors to perform driving services for it (see [51]-[56] of the judgment).

Applying settled law, it would be inconsistent with the purpose of the relevant legislation to treat the terms of a written contract as the starting point in determining whether an individual fell within the definition of a ‘worker’ (see [57], [76] of the judgment).

The modern approach to statutory interpretation was to have regard to the purpose of a particular provision and to interpret its language, so far as possible, in the way which best gave effect to that purpose. The general purpose of the employment legislation invoked by the claimants in Autoclenz Ltd v Belcher[2011] 4 All ER 745, and by the respondents in the present case, was to protect vulnerable workers from being: paid too little for the work they did; required to work excessive hours; or subjected to other forms of unfair treatment (such as being victimised for whistleblowing) (see [70] of the judgment).

The general purpose of the employment legislation invoked by the claimants in the Autoclenz case, and by the respondents (claimants) in the present case, was not in doubt. It was to protect vulnerable workers from being paid too little for the work they did, required to work excessive hours, or subjected to other forms of unfair treatment (such as being victimised for whistleblowing). To treat the way in which the relationships between Uber, drivers and passengers were characterised by the terms of the services agreement as the starting point in classifying the parties’ relationship, and as conclusive if the facts were consistent with more than one possible legal classification, would, in effect, be to accord Uber power to determine for itself whether or not the legislation designed to protect workers would apply to its drivers (see [56]-[77] of the judgment).

Further, all the relevant statutes or statutory regulations conferring rights on workers contained prohibitions against contracting out (see [78]-[82] of the judgment).

In determining whether an individual was a worker, there could ‘be no substitute for applying the words of the statute to the facts of the individual case.’ At the same time, in applying the statutory language, it was necessary both to view the facts realistically and to keep in mind the purpose of the legislation (see [83]-[87] of the judgment).

The claimant drivers in the present case had, in some respects, a substantial measure of autonomy and independence. In particular, they were free to choose when, how much and where (within the territory covered by their private hire vehicle licence) to work. In those circumstances it was not suggested on their behalf that they performed their services under what was sometimes called an ‘umbrella’ or ‘overarching’ contract with Uber London - in other words, a contract whereby they undertook a continuing obligation to work. The contractual arrangements between drivers and Uber London did subsist over an extended period of time. However, they did not bind drivers during periods when drivers were not working: rather, they established the terms on which drivers would work for Uber London on each occasion when they chose to log on to the Uber app (see [90] of the judgment).

Equally, it was well established and not disputed by Uber that the fact that an individual was entirely free to work or not, and owes no contractual obligation to the person for whom the work was performed when not working, did not preclude a finding that the individual was a worker, or indeed an employee, at the times when he or she was working. Where an individual only worked intermittently or on a casual basis for another person, that might, depending on the facts, tend to indicate a degree of independence, or lack of subordination, in the relationship while at work which was incompatible with worker status (see [91] of the judgment).

In the present case, there were three parties involved: Uber, drivers and passengers. However, the focus had to still be on the nature of the relationship between drivers and Uber. The principal relevance of the involvement of third parties (passengers) was the need to consider the relative degree of control exercised by Uber and drivers respectively over the service provided to them. A particularly important consideration was who determined the price charged to the passenger. More generally, it was necessary to consider who was responsible for defining and delivering the service provided to passengers. A further and related factor was the extent to which the arrangements with passengers afforded drivers the potential to market their own services and develop their own independent business (see [92] of the judgment).

In all those respects, the ET’s findings justified its conclusion that, although free to choose when and where they worked, at times when they were working drivers work for and under contracts with Uber (and, specifically, Uber London). Five aspects of the ET’s findings were worth emphasising. First and of major importance, the remuneration paid to drivers for the work they did was fixed by Uber and the drivers had no say in it (other than by choosing when and how much to work). Second, the contractual terms on which drivers perform their services were dictated by Uber. Third, although drivers had the freedom to choose when and where (within the area covered by their PHV licence) to work, once a driver had logged onto the Uber app, a driver’s choice about whether to accept requests for rides was constrained by Uber. Fourth, Uber exercised a significant degree of control over the way in which drivers delivered their services. Fifth, Uber restricted communication between passenger and driver to the minimum necessary to perform the particular trip and took active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride (see [93]-[100] of the judgment).

Taking those factors together, it could be seen that the transportation service performed by drivers and offered to passengers through the Uber app was very tightly defined and controlled by Uber. Furthermore, it was designed and organised in such a way as to provide a standardised service to passengers in which drivers were perceived as substantially interchangeable and from which Uber, rather than individual drivers, obtained the benefit of customer loyalty and goodwill (see [101] of the judgment).

The fact that some aspects of the way in which Uber operated its business were required in order to comply with the regulatory regime (although many features were not) could not logically be, as Uber had sought to argue, any reason to disregard or attach less weight to those matters in determining whether drivers were workers (see [102] of the judgment).

Autoclenz Ltd v Belcher [2011] UKSC 41 explained; Secret Hotels2 Ltd v Revenue and Customs Comrs [2014] UKSC 16 distinguished; Snook v London and West Riding Investments Ltd [1967] 2 QB 786 considered; Street v Mountford [1985] AC 809 considered; McMeechan v Secretary of State for Employment [1997] IRLR 353 considered; Cheng Yuen v Royal Hong Kong Golf Club [1997] 3 LRC 414 considered; Carmichael v National Power plc [1999] 1 WLR 2042 considered; Byrne Brothers (Formwork) Ltd v Baird EAT/542/01 considered; Allonby v Accrington and Rossendale College: C-256/01 C-256/01 considered; Mingeley v Pennock & Ivory (t/a Amber Cars) [2004] EWCA Civ 328 considered; Prater v Cornwall County Council [2006] EWCA Civ 102 considered; James v Redcats (Brands) Ltd UKEAT/0475/06 considered; Union syndicale Solidaires Isère v Premier ministre: C-428/09 C-428/09 considered; Jivraj v Hashwani [2011] UKSC 40 considered; Quashie v Stringfellows Restaurants Ltd [2012] EWCA Civ 1735 considered; Bates van Winkelhof v Clyde & Co LLP [2014] UKSC 32 considered; UBS AG v Revenue and Customs Commissioners; DB Group Services (UK) Ltd v Revenue and Customs Commissioners [2016] UKSC 13 considered; Secretary of State for Justice v Windle [2016] EWCA Civ 459 considered; Pimlico Plumbers Ltd and another v Smith [2018] UKSC 29 considered; First Tower Trustees Ltd and another v CDS (Superstores International) Ltd [2018] EWCA Civ 1396 considered; AFMB Ltd and Others v Raad van bestuur van de Sociale verzekeringsbank C-610/18 considered.

(2) Whether the ET had erred in finding that: (i) periods during which its three conditions were met constituted ‘working time’ for the purpose of the 1998 Regulations; (ii) drivers’ working hours should be classified as ‘unmeasured work’; and (iii) that the respondents’ working hours were not ‘time work’.

So far as the present court had been shown, no evidence had been adduced at the hearing in the ET in 2016 that there had, at that time, been any other app-based PHV transportation service operating in London or that drivers logged into the Uber app were as a matter of practical reality also able to hold themselves out as at the disposal of other PHV operators when waiting for a trip. No finding had been made by the ET on that subject. In those circumstances, the ET had not been wrong to have found that periods during which its three conditions were met constituted ‘working time’ for the purpose of the 1998 Regulations (see [137] of the judgment).

What counted as working time, for the purposes of the right to be paid the national minimum wage, was defined by the National Minimum Wage Regulations 2015, SI 2015/6221. Those regulations contained complex provisions for measuring hours worked depending on how the work was classified. Before the ET, there had been an issue as to whether a driver’s working hours should be classified as ‘time work’, as Uber had argued, or as ‘unmeasured work’, as the ET had held. It was accepted by Uber that ‘time work’ could only be the appropriate category if the driver was working only when carrying a passenger and not otherwise. As the present court had concluded that the ET had been entitled to reject that contention, it followed that it had also been entitled to find that the respondents’ working hours were not ‘time work’. As it was common ground that those hours did not fall within the definitions of ‘salaried work’ or ‘output work’, it further followed that the ET had been entitled to find that they constituted ‘unmeasured work’, which was a residual or default category. On that point too, therefore, there was no basis for interfering with the ET’s decision (see [136], [138] of the judgment).

The appeal would be dismissed (see [139] of the judgment).

Carmichael v National Power plc [1999] 1 WLR 2042 considered; Ville de Nivelles v Matzak C-518/15 considered.

Decision of the Court of Appeal, Civil Division [2019] 3 All ER 489  affirmed.

Dinah Rose QC and Fraser Campbell (instructed by DLA Piper (UK) LLP (London)) for Uber.

Jason Galbraith-Marten QC Sheryn Omeri (instructed by Bates Wells & Braithwaite LLP (London)) for the first and the second respondents.

Oliver Segal QC Melanie Tether (instructed by Leigh Day (London)) for the third respondent.

Carla Dougan-Bacchus Barrister.