Legal Precedents – No win no fee Employment Solicitors

Hilary Term
[2021] UKSC 5
On appeal from: [2018] EWCA Civ 2748
JUDGMENT
Uber BV and others (Appellants) v Aslam and
others (Respondents)
before
Lord Reed, President
Lord Hodge, Deputy President
Lady Arden
Lord Kitchin
Lord Sales
Lord Hamblen
Lord Leggatt
JUDGMENT GIVEN ON
19 February 2021
Heard on 21 and 22 July 2020
Appellants Respondents (1 and 2)
Dinah Rose QC Jason Galbraith-Marten QC
Fraser Campbell Sheryn Omeri
(Instructed by DLA Piper
(UK) LLP (London))
(Instructed by Bates Wells
& Braithwaite LLP
(London))
Respondent (3)
Oliver Segal QC
Melanie Tether
(Instructed by Leigh Day
(London))
Respondents:-
(1) Yaseen Aslam
(2) James Farrar
(3) Robert Dawson and others
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LORD LEGGATT: (with whom Lord Reed, Lord Hodge, Lady Arden, Lord
Sales and Lord Hamblen agree)
Introduction

New ways of working organised through digital platforms pose pressing
questions about the employment status of the people who do the work involved. The
central question on this appeal is whether an employment tribunal was entitled to
find that drivers whose work is arranged through Uber’s smartphone application
(“the Uber app”) work for Uber under workers’ contracts and so qualify for the
national minimum wage, paid annual leave and other workers’ rights; or whether, as
Uber contends, the drivers do not have these rights because they work for themselves
as independent contractors, performing services under contracts made with
passengers through Uber as their booking agent. If drivers work for Uber under
workers’ contracts, a secondary question arises as to whether the employment
tribunal was also entitled to find that the drivers who have 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 argues, they were working only when driving
passengers to their destinations.
For the reasons given in this judgment, I would affirm the conclusion of the
Employment Appeal Tribunal and the majority of the Court of Appeal that the
employment tribunal was entitled to decide both questions in the claimants’ favour.
The parties
The first appellant, Uber BV, is a Dutch company which owns the rights in
the Uber app. The second appellant, Uber London Ltd (“Uber London”), is a UK
subsidiary of Uber BV which, since May 2012, has been licensed to operate private
hire vehicles in London. The third appellant, Uber Britannia Ltd, is another UK
subsidiary of Uber BV which holds licences to operate such vehicles outside
London. In this judgment I will use the name “Uber” to refer to the appellants
collectively when it is not necessary to differentiate between them.
The claimants, and respondents to this appeal, are individuals who work or
used to work as private hire vehicle drivers, performing driving services booked
through the Uber app. For the purpose of the decision which has given rise to this
appeal, the employment tribunal limited its consideration to two test claimants, Mr
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Yaseen Aslam and Mr James Farrar, both of whom were licensed to drive private
hire vehicles in London. Like the employment tribunal, I will use masculine
pronouns for brevity when referring to Uber drivers in this judgment in
circumstances where all the claimant drivers are male.
At the time of the employment tribunal hearing in 2016, 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.
The Uber system
As described in more detail in the decision of the employment tribunal,
Uber’s business model is simple. Prospective customers download the Uber app (for
free) to their smartphone and create an account by providing personal information
including a method of payment. They are then able to request rides. To do so, they
open the Uber app on their phone and make a request. In the period considered by
the employment tribunal, users did not have to enter their destination when booking
a ride through the app, but they generally did so. The Uber app identifies the
passenger’s location through the smartphone’s geolocation system. Using the same
technology, the app identifies the nearest available driver who is logged into the app
and informs him (via his smartphone) of the request. At this stage the driver is told
the passenger’s first name and Uber rating (as to which, see below) and has ten
seconds in which to decide whether to accept the request. If the driver does not
respond within that time, the next closest driver is located and offered the trip. Once
a driver accepts, the trip is assigned to that driver and the booking confirmed to the
passenger, who is sent the driver’s name and car details.
At this point the driver and passenger are put into direct contact with each
other through the Uber app, but this is done in such a way that neither has access to
the other’s mobile telephone number. The purpose is to enable them to communicate
with each other in relation to the pick-up, for example to identify the passenger’s
precise location or to advise of problems such as traffic delay. The passenger can
also track the driver’s progress on a map on their smartphone.
The driver is not informed of the passenger’s destination until the passenger
is collected. At that point the driver learns the destination either directly from the
passenger or through the app (if the destination was entered when the ride was
requested) when the driver presses “start trip” on his phone. The Uber app
incorporates route planning software and provides the driver with detailed directions
to the destination. The driver is not bound to follow those directions but departure
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from the recommended route may result in a reduction in payment if the passenger
complains about the route taken.
On arrival at the destination, the driver presses “complete trip” on his
smartphone. The fare is then calculated automatically by the Uber app, based on
time spent and distance covered. At times and places of high demand, a multiplier
is applied resulting in a higher fare. Drivers are permitted to accept payment in a
lower, but not a higher, sum than the fare calculated by the app (although, in the
unlikely event that a driver accepts a lower sum, the “service fee” retained by Uber
BV is still based on the fare calculated by the app). Drivers are at liberty to accept
tips but are discouraged by Uber from soliciting them.
The fare is debited to the passenger’s credit or debit card registered on the
Uber app and the passenger is sent a receipt for the payment by email. Separately,
the Uber app generates a document described as an “invoice” addressed on behalf
of the driver to the passenger (showing the passenger’s first name but not their
surname or contact details). However, the passenger never sees this document,
which is not sent to the passenger but is accessible to the driver on the Uber app and
serves as a record of the trip and the fare charged.
Uber BV makes a weekly payment to the driver of sums paid by passengers
for trips driven by the driver less a “service fee” retained by Uber BV. In the cases
of Mr Aslam and Mr Farrar, the service fee was 20% of the fares.
Drivers are prohibited by Uber from exchanging contact details with a
passenger or contacting a passenger after the trip ends other than to return lost
property.
Uber operates a ratings system whereby, after the trip, the passenger and
driver are each sent a message asking them to rate the other anonymously on a scale
of 1 to 5.
Working as a driver
To become an Uber driver, a person can sign up online. They must then attend
and present certain documents at the offices of the local Uber company (which, for
the London area, is Uber London). The required documents comprise a national
insurance certificate, driving licence, licence to drive a private hire vehicle, vehicle
logbook, MOT certificate and certificate of motor insurance. The applicant must
also take part in what the employment tribunal described as “an interview, albeit not
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a searching one”, and watch a video presentation about the Uber app and certain
Uber procedures. This process is referred to by Uber as “onboarding”.
Individuals accepted as drivers are given free access to the Uber app through
their own smartphone or may hire a smartphone for £5 a month from Uber BV
configured so that it can only be used to operate the Uber app. The driver has to
provide and pay for his own vehicle, which must be on a list of accepted makes and
models, in good condition, no older than a specified age and preferably silver or
black. Drivers must also bear all the costs of running their vehicles, including fuel,
insurance, road tax and the cost of obtaining a private hire vehicle licence.
Individuals approved to work as drivers are free to make themselves available
for work, by logging onto the Uber app, as much or as little as they want and at times
of their own choosing. They are not prohibited from providing services for or
through other organisations, including any direct competitor of Uber operating
through another digital platform. Drivers can also choose where within the territory
covered by their private hire vehicle licence they make themselves available for
work. They are not provided with any insignia or uniform and in London are
discouraged from displaying Uber branding of any kind on their vehicle.
The employment tribunal made a number of findings about standards of
performance which drivers are expected to meet and actions taken where drivers fail
to meet these standards. For example, the tribunal 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 “Polite and professional at all
times”, “Avoid inappropriate topics of conversation” and “Do not contact the rider
after the trip has ended”. Other material in the Welcome Packet, under the heading
“What Uber looks for”, stated:
“High Quality Service Stats: We continually look at your driver
rating, client comments, and feedback provided to us.
Maintaining a high rating overall helps keep a top tier service
to riders.
Low Cancellation Rate: when you accept a trip request you
have made a commitment to the rider. Cancelling often or
cancelling for unwillingness to drive to your clients leads to a
poor experience.
High Acceptance Rate: Going on duty means you are willing
and able to accept trip requests. Rejecting too many requests
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leads to rider confusion about availability. You should be off
duty if not able to take requests.”
Taking these three metrics in reverse order, drivers whose acceptance rate for
trip requests falls below a set level – which according to evidence before the tribunal
was 80% – receive warning messages reminding the driver that being logged into
the Uber app is an indication that the driver is willing and able to accept trip requests.
If the driver’s acceptance rate does not improve, the warnings escalate and culminate
in the driver being automatically logged off the Uber app for ten minutes if the driver
declines three trips in a row. A similar system of warnings, culminating in a tenminute log-off “penalty”, applies to cancellations by drivers after a trip has been
accepted. The driver’s ratings from passengers are also monitored and the
employment tribunal found that drivers who have undertaken 200 trips or more and
whose average rating is below 4.4 become subject to a graduated series of “quality
interventions” aimed at assisting them to improve. If their ratings do not improve to
an average of 4.4 or better, they are “removed from the platform” and their accounts
“deactivated”.
Uber also operates a “driver offence process” to address misconduct by
drivers. This again involves a graduated series of measures, beginning with a
“warning” message and potentially leading to “deactivation”.
In addition, Uber London handles passenger complaints, including
complaints about a driver, and decides whether to make any refund to the passenger
(sometimes without even referring the matter to the driver concerned). Such a refund
will generally result in a correspondingly reduced payment to the driver, though the
tribunal found that on occasions, when Uber London considers it necessary or politic
to make a refund but there is no proper ground for holding the driver to be at fault,
Uber London will bear the cost of the refund itself.
Uber will in some circumstances pay drivers the cost, or a contribution
towards the cost, of cleaning vehicles soiled by passengers. The employment
tribunal noted that it was not suggested that such payments were conditional upon
Uber recovering this sum from the passenger.
Written agreements between Uber BV and drivers
Before using the Uber app as drivers for the first time, the claimants 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” dated 1 July
In October 2015 a new “Services Agreement” was introduced to which drivers
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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 are not material for present purposes and it is sufficient to refer to the new
terms contained in the Services Agreement.
The Services Agreement is formulated as a legal agreement between Uber
BV and “an independent company in the business of providing transportation
services”, referred to as “Customer”. It contains an undertaking by “Customer” to
enter into a contract with each driver in the form of an accompanying “Driver
Addendum”. This arrangement is inapposite for the vast majority of drivers who
sign up as individuals and not on behalf of any “independent company” which in
turn engages drivers.
In the typical case where “Customer” is an individual driver, the nature of the
relevant services and relationships as characterised by the Services Agreement is
that Uber BV agrees to provide electronic services (referred to as the “Uber
Services”) to the driver, which include access to the Uber app and payment services,
and the driver agrees to provide transportation services to passengers (referred to as
“Users”). The agreement states that Customer acknowledges and agrees that Uber
BV does not provide transportation services and that, where Customer accepts a
User’s request for transportation services made through the Uber app, Customer is
responsible for providing those transportation services and, by doing so, “creates a
legal and direct business relationship between Customer and the User, to which
neither Uber [BV] nor any of its Affiliates in the Territory is a party” (see clause
2.3).
Clause 4.1 of the Services Agreement states that:
“… Customer: (i) appoints Uber [BV] as Customer’s limited
payment collection agent solely for the purpose of accepting
the Fare … on behalf of the Customer via the payment
processing functionality facilitated by the Uber Services; and
(ii) agrees that payment made by User to Uber [BV] shall be
considered the same as payment made directly by User to
Customer.”
Clause 4.1 also states that the “Fare” is determined by Uber BV but describes it as
charged by Customer and as “a recommended amount” which Customer may choose
to reduce (but not increase) without the agreement of Uber BV. The clause further
provides that Uber BV agrees to remit to Customer on at least a weekly basis the
fare less a “service fee”, calculated as a percentage of the fare.
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Clause 4.2 gives Uber BV the right to change the fare calculation at any time
in its discretion “based upon local market factors”; and clause 4.3 provides that Uber
BV and/or its Affiliates reserve the right to adjust the fare for a particular instance
of transportation services (eg where the driver took an inefficient route) or to cancel
the fare (eg in response to a User complaint).
Written agreements between Uber and passengers
In addition to the written agreements between drivers and Uber BV, Uber
also relies in these proceedings on written terms and conditions (the “Rider Terms”)
which passengers are required to accept before they can use the Uber app. The
version of the Rider Terms current at the time of the tribunal hearing was last
updated on 16 June 2016. These Rider Terms state that they constitute an agreement
between the rider, Uber BV and the local Uber company operating in the relevant
part of the UK. As mentioned, in the case of London, the relevant company is Uber
London.
Clause 2 of Part 1 of the Rider Terms states that, as set out in clause 3, “Uber
UK” (a term defined to include Uber London) accepts private hire vehicle bookings
(“PHV Bookings”) made using the Uber app. Clause 3 states:
“Uber UK accepts PHV Bookings acting as disclosed agent for
the Transportation Provider (as principal). Such acceptance by
Uber UK as agent for the Transportation Provider gives rise to
a contract for the provision to you of transportation services
between you and the Transportation Provider (the
‘Transportation Contract’). For the avoidance of doubt: Uber
UK does not itself provide transportation services, and is not a
Transportation Provider. Uber UK acts as intermediary
between you and the Transportation Provider. You
acknowledge and agree that the provision to you of
transportation services by the Transportation Provider is
pursuant to the Transportation Contract and that Uber UK
accepts your booking as agent for the Transportation Provider,
but is not a party to that contract.”
Under Part 2 of the Rider Terms, riders are granted a licence by Uber BV to
use the Uber app, described in clause 2 as “a technology platform that enables users
… to pre-book and schedule transportation, logistics, delivery, and/or vendor
services with independent third party providers of such services, including
independent third party transportation providers.”
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The licensing regime
The operation of private hire vehicles in London is regulated by the Private
Hire Vehicles (London) Act 1998 and regulations made under it. Under that Act a
vehicle may only be used for private hire if both vehicle and driver are licensed by
the licensing authority, which is Transport for London. A licence is also required to
accept bookings (referred to in the Act as “private hire bookings”) for the hire of a
private hire vehicle to carry one or more passengers. Thus, section 2(1) provides:
“No person shall in London make provision for the invitation
or acceptance of, or accept, private hire bookings unless he is
the holder of a private hire vehicle operator’s licence for
London …”
Pursuant to section 2(2), a person who makes provision for the invitation or
acceptance of private hire bookings, or accepts such a booking, without such a
licence is guilty of a criminal offence.
At all relevant times Uber London has held a private hire vehicle (“PHV”)
operator’s licence for London. Section 4(2) of the Act places an obligation on the
holder of such a licence to secure that:
“any vehicle which is provided by him for carrying out a
private hire booking accepted by him in London is –
(a) a vehicle for which a London PHV licence is in
force driven by a person holding a London PHV driver’s
licence; …”
Pursuant to regulation 9(3) of the Private Hire Vehicles (London) (Operators’
Licences) Regulations 2000, as originally formulated, it was a condition of the grant
of a London PHV operator’s licence that:
“The operator shall, if required to do so by a person making a
private hire booking:
(a) agree the fare for the journey booked, or
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(b) provide an estimate of that fare.”
With effect from 27 June 2016, this regulation was amended to add a requirement
that any estimate of the fare must be accurate, in accordance with criteria specified
by the licensing authority.
The obligations of the operator under the Act and regulations also include
keeping records of all bookings accepted and of all private hire vehicles and drivers
available to the operator for carrying out bookings accepted by him.
Statutory rights of “workers”
The rights claimed by the claimants in these proceedings are: rights under the
National Minimum Wage Act 1998 and associated regulations to be paid at least the
national minimum wage for work done; rights under the Working Time Regulations
1998 which include the right to receive paid annual leave; and in the case of two
claimants, one of whom is Mr Aslam, a right under the Employment Rights Act
1996 not to suffer detrimental treatment on the grounds of having made a protected
disclosure (“whistleblowing”).
All these rights are conferred by the legislation on “workers”. The term
“worker” is defined by section 230(3) of the Employment Rights Act 1996 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 undertakes to do or perform personally
any work or services for another party to the contract
whose status is 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.”
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A “contract of employment” is defined in section 230(2) of the Act to mean
“a contract of service or apprenticeship, whether express or implied, and (if it is
express) whether oral or in writing.” An “employee” means an individual who has
entered into or works under a contract of employment: see section 230(1). However,
the terms “employer” and “employed” are defined more broadly to refer to the
person by whom an employee or worker is (or was) employed under a worker’s
contract: see section 230(4) and (5).
Similar definitions of all these terms are contained in section 54 of the
National Minimum Wage Act 1998 and regulation 2(1) of the Working Time
Regulations 1998.
The effect of these definitions, as Baroness Hale of Richmond observed in
Bates van Winkelhof v Clyde & Co LLP [2014] UKSC 32; [2014] 1 WLR 2047,
paras 25 and 31, is that employment law distinguishes between three types of people:
those employed under a contract of employment; those self-employed people who
are in business on their own account and undertake work for their clients or
customers; and an intermediate class of workers who are self-employed but who
provide their services as part of a profession or business undertaking carried on by
someone else. Some statutory rights, such as the right not to be unfairly dismissed,
are limited to those employed under a contract of employment; but other rights,
including those claimed in these proceedings, apply to all “workers”.
These proceedings
Following a preliminary hearing, the employment tribunal decided that the
claimants 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 quoted at para 35 above. The tribunal
further found that, for the purposes of the relevant legislation, the claimants were
working for Uber London during any period when a claimant (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.
An appeal by Uber from this decision to the Employment Appeal Tribunal
was dismissed, as was a further appeal to the Court of Appeal (Sir Terence Etherton
MR and Bean LJ, with Underhill LJ dissenting). The Court of Appeal granted Uber
permission to appeal to this court.
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The main issue
Limb (b) of the statutory definition of a “worker’s contract” has three
elements: (1) a contract whereby an individual undertakes to perform work or
services for the other party; (2) an undertaking to do the work or perform the services
personally; and (3) a requirement that the other party to the contract is not a client
or customer of any profession or business undertaking carried on by the individual.
This case is concerned with the first of these requirements. It is not in dispute
that the claimant drivers worked under contracts whereby they undertook to perform
driving services personally; and it is not suggested that any Uber company was a
client or customer of the claimants. The critical issue is whether, for the purposes of
the statutory definition, the claimants are to be regarded as working under contracts
with Uber London whereby they undertook to perform services for Uber London; or
whether, as Uber contends, they are to be regarded as performing services solely for
and under contracts made with passengers through the agency of Uber London.
Uber’s case
It is Uber’s case that, in answering this question, the correct starting point is
to interpret the terms of the written agreements between Uber BV and drivers and
between the Uber companies and passengers. Uber relies on the terms of these
written agreements quoted above which state that, when a request to book a private
hire vehicle made through the Uber app is accepted, a contract is thereby created
between passenger and driver, to which no Uber entity is a party and under which
the driver is solely responsible for providing transportation services to the passenger.
Uber also relies on terms of the written agreements which state that the only role of
Uber BV is to provide technology services and to act as a payment collection agent
for the driver and that the only role of Uber London (and other Uber UK companies)
is to act as a booking agent for drivers.
Uber maintains that the approach adopted by the employment tribunal, the
Employment Appeal Tribunal and the majority of the Court of Appeal was wrong
in law because it involved disregarding, without any legal justification, the clear and
unambiguous terms of the written agreements.
Uber London not authorised to act as a booking agent
There is a difficulty which, in my view, would be fatal for Uber’s case even
if the correct approach to deciding whether the claimants were working under
workers’ contracts with Uber London were simply to apply ordinary principles of
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the law of contract and agency. This difficulty stems from the fact that there is no
written agreement between Uber London and drivers. In these circumstances the
nature of their relationship has to be inferred from the parties’ conduct, considered
in its relevant factual and legal context.
It is an important feature of the context in which, as the employment tribunal
found, Uber London recruits and communicates on a day to day basis with drivers
that, as mentioned earlier: (1) it is unlawful for anyone in London to accept a private
hire booking unless that person is 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 holds such a licence is Uber London. It is reasonable to assume, at
least unless the contrary is demonstrated, that the parties intended to comply with
the law in the way they dealt with each other.
Uber maintains that the acceptance of private hire bookings by a licensed
London PHV operator acting as agent for drivers would comply with the regulatory
regime. I am not convinced by this. References in the Private Hire Vehicles
(London) Act 1998 to “acceptance” of a private hire booking are reasonably
understood to connote acceptance (personally and not merely for someone else) of
a contractual obligation to carry out the booking and provide a vehicle for that
purpose. This is implicit, for example, in section 4(2) of the Act quoted at para 31
above. It would in principle be possible for Uber London both to accept such an
obligation itself and also to contract on behalf of the driver of the vehicle. However,
if this were the arrangement made, it would seem hard to avoid the conclusion that
the driver, as well as Uber London, would be a person who accepts the booking by
undertaking a contractual obligation owed directly to the passenger to carry it out.
If so, the driver would be in contravention of section 2(1) of the Private Hire
Vehicles (London) Act 1998 by accepting a private hire booking without holding a
private hire vehicle operator’s licence for London. This suggests that the only
contractual arrangement compatible with the licensing regime is one whereby Uber
London as the licensed operator accepts private hire bookings as a principal (only)
and, to fulfil its obligation to the passenger, enters into a contract with a
transportation provider (be that an individual driver or a firm which in turn provides
a driver) who agrees to carry out the booking for Uber London.
Counsel for Uber sought to resist this interpretation of the legislation on the
basis that the legislation was enacted in the context of “a long-established industry
practice” under which PHV operators may merely act as agents for drivers who
contract directly with passengers. Uber has adduced no evidence, however, of any
such established practice which the Private Hire Vehicles (London) Act 1998 may
be taken to have been intended to preserve. I will consider later two cases involving
minicab firms which were said by counsel for Uber to show that the courts have
endorsed such an agency model. But it is sufficient to say now that in neither case
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was any consideration given to whether such an arrangement would comply with
the licensing regime. The same is true of cases also relied on by Uber (along with a
notice published by HMRC in 2002) which are concerned with how VAT applies to
the supply of private hire vehicles. That material in my view has no bearing on the
issues raised in these proceedings.
It is unnecessary, however, to express any concluded view on whether an
agency model of operation would be compatible with the PHV licensing regime
because there appears to be no factual basis for Uber’s contention that Uber London
acts as an agent for drivers when accepting private hire bookings.
It is true that the Rider Terms on which Uber contracts with passengers
include a term (in clause 3 of Part 1, quoted at para 28 above) which states that Uber
London (or other local Uber company) accepts 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”. It is, however, trite
law that a person (A) cannot create a contract between another person (B) and a third
party merely by claiming or purporting to do so but only if A is (actually or
ostensibly) authorised by B to act as B’s agent.
Authority may be conferred by a contract between principal and agent. It
cannot be said, however, that the Rider Terms establish a contract between drivers
and Uber London. There is no evidence that drivers were ever sent the Rider Terms
let alone consented to them. In any case the Rider Terms state that they constitute
an agreement between the rider, Uber BV and the relevant local Uber company: they
do not purport to record an agreement to which any driver is a party. In accordance
with basic principles of contract and agency law, therefore, nothing stated in the
Rider Terms is 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.
The only written agreements to which drivers were parties were agreements
with Uber BV, the Dutch parent company. No other Uber company was a party to
those agreements. In any case, although clause 2.2 of the Services Agreement
describes what is to happen if a driver accepts a trip request “either directly or
through an Uber Affiliate in the Territory acting as agent”, there is no provision
which purports to confer the driver’s authority on any Uber Affiliate to accept such
requests on his behalf.
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An agency relationship need not be contractual. What is required is an overt
act by the principal conferring authority on the agent to act on the principal’s behalf.
Even if lacking such actual authority, a person (A) who purports to act as agent for
another (B) may still affect B’s legal relations with a third party under the principle
of ostensible or apparent authority, but only if B has represented to the third party
that A is authorised to act as B’s agent and the third party has relied on that
representation.
The employment tribunal made no finding that drivers did any overt act that
conferred authority on Uber London to act as the driver’s agent in accepting
bookings so as to create a contract between the driver and the passenger, nor that
drivers did or said anything that represented to passengers that Uber London was
authorised to act as their agent. Uber’s case that Uber London acted as a booking
agent for drivers has been based solely on the written agreements referred to at paras
22-28 above – which, for the reasons given, do not support it. When pressed during
oral argument on how the alleged agency relationship between drivers and Uber
London was created, leading counsel for Uber, Ms Dinah Rose QC, suggested that
it was created when a driver attended Uber London’s offices in person and presented
the documents required in order to be authorised to use the Uber app. So far as I am
aware, this was the first time that such a suggestion had been made in these
proceedings. Not only is it unsupported by any finding of the employment tribunal
but, so far as this court has been shown, there was no evidence capable of founding
such an inference.
In order to found such an inference, it would be necessary to point, at the
least, to a prior communication from Uber London to the individual concerned or
other background facts known to both parties which would lead reasonable people
in their position to understand that, by producing the documents required by Uber
London, an individual who did so was thereby authorising Uber London to contract
with passengers as his agent, rather than – as seems to me the natural inference –
merely applying for a job as one of Uber’s drivers. There is no finding of the
employment tribunal that any such communication was made nor that anything
occurred during the “onboarding” process which could, even arguably, be construed
as an act by the prospective driver appointing Uber London to act as his booking
agent.
Once the assertion that Uber London contracts as a booking agent for drivers
is rejected, the inevitable conclusion is that, by accepting a booking, Uber London
contracts as principal with the passenger to carry out the booking. In these
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. Considered against that background, it is difficult to see how
Uber’s business could operate without Uber London entering into contracts with
Page 16
drivers (even if only on a per trip basis) under which drivers undertake to provide
services to carry out the private hire bookings accepted by Uber London.
Given the importance of the wider issue, however, I do not think it would be
right to decide this appeal on this basis alone and without addressing Uber’s
argument that the question whether an individual is a “worker” for the purpose of
the relevant legislation ought in principle to be approached, as the starting point, by
interpreting the terms of any applicable written agreements.
The Autoclenz case
In advancing this argument, Uber has to confront the decision of this court in
Autoclenz Ltd v Belcher [2011] UKSC 41; [2011] ICR 1157.
In the Autoclenz case the claimants worked as “valeters” performing car
cleaning services which the company (Autoclenz) had contracted to provide to third
parties. In order to obtain the work, the claimants were required to sign written
contracts which stated that they were subcontractors and not employees of
Autoclenz; that they were not obliged to provide services to the company, nor was
the company obliged to offer work to them; and that they could provide suitably
qualified substitutes to carry out the work on their behalf. As in the present case, the
claimants brought proceedings claiming that they were “workers” for the purposes
of the legislation conferring the rights to be paid the national minimum wage and to
receive statutory paid leave. The employment tribunal held that the claimants came
within both limbs of the definition of a “worker” and appeals by Autoclenz were
dismissed at every level including the Supreme Court.
In the Supreme Court the sole judgment was given by Lord Clarke of Stonecum-Ebony, with whom the other Justices agreed. In his discussion of the legal
principles, Lord Clarke drew a distinction between certain principles “which apply
to ordinary contracts and, in particular, to commercial contracts”, and “a body of
case law in the context of employment contracts in which a different approach has
been taken” (see para 21). It can be seen from a passage quoted by Lord Clarke (at
para 20) from the judgment of Aikens LJ in the Court of Appeal [2010] IRLR 70,
paras 87-89, that the principles applicable to ordinary contracts to which he was here
referring were: (i) the “parol evidence rule”, whereby a contractual document is
treated, at least presumptively, as containing the whole of the parties’ agreement;
(ii) the signature rule, whereby a person who signs a contractual document is treated
in law as bound by its terms irrespective of whether he or she has in fact read or
understood them; and (iii) the principle that, generally, the only way in which a party
to a written contract can argue that its terms do not accurately reflect the true
Page 17
agreement of the parties is by alleging that a mistake was made in drawing up the
contract which the court can correct by ordering rectification.
Whilst stating that nothing in his judgment was intended to alter these
principles as they apply to ordinary contracts, Lord Clarke endorsed the view of
Aikens LJ that, in the employment context, rectification principles are not in point
and there may be reasons other than a mistake in setting out the contract terms why
the written terms do not accurately reflect what the parties actually agreed.
Beginning at para 22 of the judgment, Lord Clarke considered three cases in
which “the courts have held that the employment tribunal should adopt a test that
focuses on the reality of the situation where written documentation may not reflect
the reality of the relationship”. From these cases he drew the conclusion (at para 28)
that, in the employment context, it is too narrow an approach to say that a court or
tribunal may only disregard a written term as not part of the true agreement between
the parties if the term is shown to be a “sham”, in the sense that the parties had a
common intention that the term should not create the legal rights and obligations
which it gives the appearance of creating: see Snook v London and West Riding
Investments Ltd [1967] 2 QB 786, 802 (Diplock LJ). Rather, the court or tribunal
should consider what was actually agreed between the parties, “either as set out in
the written terms or, if it is alleged those terms are not accurate, what is proved to
be their actual agreement at the time the contract was concluded”: see para 32, again
agreeing with observations of Aikens LJ in the Court of Appeal.
After quoting (at para 34) a further statement of Aikens LJ contrasting the
circumstances in which contracts relating to work or services are often concluded
with “those in which commercial contracts between parties of equal bargaining
power are agreed,” Lord Clarke ended his discussion of the law (at para 35) by
saying:
“So the relative bargaining power of the parties must be taken
into account in deciding whether the terms of any written
agreement in truth represent what was agreed and the true
agreement will often have to be gleaned from all the
circumstances of the case, of which the written agreement is
only a part. This may be described as a purposive approach to
the problem. If so, I am content with that description.”
Applying that approach to the facts of the Autoclenz case, Lord Clarke
concluded that, on the basis of findings of fact not capable of challenge on appeal,
the employment tribunal was entitled to hold that the contractual documents did not
reflect the true agreement between the parties – in particular insofar as the documents
Page 18
stated that Autoclenz was under no obligation to offer work to the claimants, nor
they to accept it, and that the claimants had a right to provide a substitute. The
tribunal was entitled to find that the actual understanding of the parties was that the
claimants would be available to work, and would be offered work, whenever there
was work available, and that they were required to perform the work personally. It
followed that the employment tribunal was entitled to hold that the claimants were
“workers” working under contracts of employment.
Uber’s interpretation of the Autoclenz case
Uber submits that what the Autoclenz case decided is that, for the purposes
of applying a statutory classification, a court or tribunal may disregard terms of a
written agreement if it is shown that the terms in question do not represent the “true
agreement” or what was “actually agreed” between the parties, as ascertained by
considering all the circumstances of the case including how the parties conducted
themselves in practice. If, however, there is no inconsistency between the terms of
the written agreement and how the relationship operated in reality, there is no basis
for departing from the written agreement.
Uber further submits that there is no inconsistency in the present case
between the written agreements between Uber, drivers and passengers and how that
tripartite relationship actually operated in practice. In particular, Uber argues that
the facts found by the employment tribunal (or alternatively, which the tribunal
should have found) are consistent with the written terms stipulating that the drivers
were performing their services under contracts made with passengers through the
agency of Uber London and not for or under any contract with any Uber company.
Uber submits that there is in these circumstances no legal basis for finding that the
terms of the written agreements did not reflect the true agreements between the
parties and hence for departing from the classification of the parties’ relationships
set out in the contractual documentation.
This argument was accepted by Underhill LJ in his dissenting judgment in
the Court of Appeal. In his view (stated at para 120):
“It is an essential element in that ratio [ie of the Autoclenz case]
that the terms of the written agreement should be inconsistent
with the true agreement as established by the tribunal from all
the circumstances. There is nothing in the reasoning of the
Supreme Court that gives a tribunal a free hand to disregard
written contractual terms which are consistent with how the
parties worked in practice but which it regards as unfairly
disadvantageous (whether because they create a relationship
Page 19
that does not attract employment protection or otherwise) and
which might not have been agreed if the parties had been in an
equal bargaining position.”
Interpreting the statutory provisions
The judgment of this court in the Autoclenz case made it clear that whether a
contract is a “worker’s contract” within the meaning of the legislation designed to
protect employees and other “workers” is not to be determined by applying ordinary
principles of contract law such as the parol evidence rule, the signature rule and the
principles that govern the rectification of contractual documents on grounds of
mistake. Not only was this expressly stated by Lord Clarke but, had ordinary
principles of contract law been applied, there would have been no warrant in the
Autoclenz case for disregarding terms of the written documents which were
inconsistent with an employment relationship, as the court held that the employment
tribunal had been entitled to do. What was not, however, fully spelt out in the
judgment was the theoretical justification for this approach. It was emphasised that
in an employment context the parties are frequently of very unequal bargaining
power. But the same may also be true in other contexts and inequality of bargaining
power is not generally treated as a reason for disapplying or disregarding ordinary
principles of contract law, except in so far as Parliament has made the relative
bargaining power of the parties a relevant factor under legislation such as the Unfair
Contract Terms Act 1977.
Critical to understanding the Autoclenz case, as I see it, is that the rights
asserted by the claimants were not contractual rights but were created by legislation.
Thus, the task for the tribunals and the courts was not, unless the legislation required
it, to identify whether, under the terms of their contracts, Autoclenz had agreed that
the claimants should be paid at least the national minimum wage or receive paid
annual leave. It was to determine whether the claimants fell within the definition of
a “worker” in the relevant statutory provisions so as to qualify for these rights
irrespective of what had been contractually agreed. In short, the primary question
was one of statutory interpretation, not contractual interpretation.
The modern approach to statutory interpretation is to have regard to the
purpose of a particular provision and to interpret its language, so far as possible, in
the way which best gives effect to that purpose. In UBS AG v Revenue and Customs
Comrs [2016] UKSC 13; [2016] 1 WLR 1005, paras 61-68, Lord Reed (with whom
the other Justices of the Supreme Court agreed) explained how this approach
requires the facts to be analysed in the light of the statutory provision being applied
so that if, for example, a fact is of no relevance to the application of the statute
construed in the light of its purpose, it can be disregarded. Lord Reed cited the pithy
Page 20
statement of Ribeiro PJ in Collector of Stamp Revenue v Arrowtown Assets Ltd
(2003) 6 ITLR 454, para 35:
“The ultimate question is whether the relevant statutory
provisions, construed purposively, were intended to apply to
the transaction, viewed realistically.”
The purpose of protecting workers
The general purpose of the employment legislation invoked by the claimants
in the Autoclenz case, and by the claimants in the present case, is not in doubt. It is
to protect vulnerable workers from being paid too little for the work they do,
required to work excessive hours or subjected to other forms of unfair treatment
(such as being victimised for whistleblowing). The paradigm case of a worker whom
the legislation is designed to protect is an employee, defined as an individual who
works under a contract of employment. In addition, however, the statutory definition
of a “worker” includes in limb (b) a further category of individuals who are not
employees. The purpose of including such individuals within the scope of the
legislation was clearly elucidated by Mr Recorder Underhill QC giving the judgment
of the Employment Appeal Tribunal in Byrne Bros (Formwork) Ltd v Baird [2002]
ICR 667, para 17(4):
“[T]he policy behind the inclusion of limb (b) … can only have
been to extend the benefits of protection to workers who are in
the same need of that type of protection as employees stricto
sensu – workers, that is, who are viewed as liable, whatever
their formal employment status, to be required to work
excessive hours (or, in the cases of Part II of the Employment
Rights Act 1996 or the National Minimum Wage Act 1998, to
suffer unlawful deductions from their earnings or to be paid too
little). The reason why employees are thought to need such
protection is that they are in a subordinate and dependent
position vis-à-vis their employers: the purpose of the
Regulations is to extend protection to workers who are,
substantively and economically, in the same position. Thus the
essence of the intended distinction must be between, on the one
hand, workers whose degree of dependence is essentially the
same as that of employees and, on the other, contractors who
have a sufficiently arm’s-length and independent position to be
treated as being able to look after themselves in the relevant
respects.”
Page 21
The Regulations referred to in this passage are the Working Time Regulations
1998 which implemented Directive 93/104/EC (“the Working Time Directive”); and
a similar explanation of the concept of a worker has been given in EU law. Although
there is no single definition of the term “worker”, which appears in a number of
different contexts in the Treaties and EU legislation, there has been a degree of
convergence in the approach adopted. In Allonby v Accrington and Rossendale
College (Case C-256/01) [2004] ICR 1328; [2004] ECR I-873 the European Court
of Justice held, at para 67, that in the Treaty provision which guarantees male and
female workers equal pay for equal work (at that time, article 141 of the EC Treaty):
“… there must be considered as a worker a person who, for a
certain period of time, performs services for and under the
direction of another person in return for which he receives
remuneration …”
The court added (at para 68) that the authors of the Treaty clearly did not intend that
the term “worker” should include “independent providers of services who are not in
a relationship of subordination with the person who receives the services”. In the
EU case law which is specifically concerned with the meaning of the term “worker”
in the Working Time Directive, the essential feature of the relationship between
employer and worker is identified in the same terms as in para 67 of the Allonby
judgment: Union Syndicale Solidaires Isere v Premier Ministre (Case C-428/09)
EU:C:2010:612; [2010] ECR I-9961, para 28; Fenoll v Centre d’Aide par le Travail
“La Jouvene” (Case C-316/13) EU:C:2015:2000; [2016] IRLR 67, para 29; and
Syndicatul Familia Constanta v Directia Generala de Asistenta Sociala si Protectia
Copilului Constanta (Case C-147/17) EU:C:2018:926; [2019] ICR 211, para 41. As
stated by the Court of Justice of the European Union (CJEU) in the latter case, “[i]t
follows that an employment relationship [ie between employer and worker] implies
the existence of a hierarchical relationship between the worker and his employer”
(para 42).
In Hashwani v Jivraj [2011] UKSC 40; [2011] 1 WLR 1872 the Supreme
Court followed this approach in holding that an arbitrator was not a person employed
under “a contract personally to do any work” for the purpose of legislation
prohibiting discrimination on the grounds of religion or belief. Lord Clarke, with
whom the other members of the court agreed, identified (at para 34) the essential
questions underlying the distinction between workers and independent contractors
outside the scope of the legislation as being:
“whether, on the one hand, the person concerned performs
services for and under the direction of another person in return
for which he or she receives remuneration or, on the other hand,
he or she is an independent provider of services who is not in a
Page 22
relationship of subordination with the person who receives the
services.”
In the Bates van Winkelhof case at para 39, Baroness Hale cautioned that,
while “subordination may sometimes be an aid to distinguishing workers from other
self-employed people, it is not a freestanding and universal characteristic of being a
worker.” In that case the Supreme Court held that a solicitor who was a member of
a limited liability partnership was a worker essentially for the reasons that she could
not market her services as a solicitor to anyone other than the LLP and was an
integral part of their business. While not necessarily connoting subordination,
integration into the business of the person to whom personal services are provided
and the inability to market those services to anyone else give rise to dependency on
a particular relationship which may also render an individual vulnerable to
exploitation.
The correlative of the subordination and/or dependency of employees and
workers in a similar position to employees is control exercised by the employer over
their working conditions and remuneration. As the Supreme Court of Canada
observed in McCormick v Fasken Martineau DuMoulin LLP 2014 SCC 39; [2014]
2 SCR 108, para 23:
“Deciding who is in an employment relationship … means, in
essence, examining how two synergetic aspects function in an
employment relationship: control exercised by an employer
over working conditions and remuneration, and corresponding
dependency on the part of a worker. … The more the work life
of individuals is controlled, the greater their dependency and,
consequently, their economic, social and psychological
vulnerability in the workplace …”
See also the illuminating discussion in G Davidov, “A Purposive Approach to
Labour Law” (2016), Chapters 3 and 6. It is these features of work relations which
give rise to a situation in which such relations cannot safely be left to contractual
regulation and are considered to require statutory regulation. This point applies in
relation to all the legislative regimes relied on in the present case and no distinction
is to be drawn between the interpretation of the relevant provision as it appears in
the Working Time Regulations 1998 (which implement the Working Time
Directive), the National Minimum Wage Act 1998 and the Employment Rights Act
1996.
Once this is recognised, it can immediately be seen that it would be
inconsistent with the purpose of this legislation to treat the terms of a written
Page 23
contract as the starting point in determining whether an individual falls within the
definition of a “worker”. To do so would reinstate the mischief which the legislation
was enacted to prevent. It is the very fact that an employer is often in a position to
dictate such contract terms and that the individual performing the work has little or
no ability to influence those terms that gives rise to the need for statutory protection
in the first place. The efficacy of such protection would be seriously undermined if
the putative employer could by the way in which the relationship is characterised in
the written contract determine, even prima facie, whether or not the other party is to
be classified as a worker. Laws such as the National Minimum Wage Act were
manifestly enacted to protect those whom Parliament considers to be in need of
protection and not just those who are designated by their employer as qualifying for
it.
This point can be illustrated by the facts of the present case. The Services
Agreement (like the Partner Terms before it) was drafted by Uber’s lawyers and
presented to drivers as containing terms which they had to accept in order to use, or
continue to use, the Uber app. It is unlikely that many drivers ever read these terms
or, even if they did, understood their intended legal significance. In any case there
was no practical possibility of negotiating any different terms. In these
circumstances to treat the way in which the relationships between Uber, drivers and
passengers are characterised by the terms of the Services Agreement as the starting
point in classifying the parties’ relationship, and as conclusive if the facts are
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 will apply to its drivers.
This is, as I see it, the relevance of the emphasis placed in the Autoclenz case
(at para 35) on the relative bargaining power of the parties in the employment
context and the reason why Lord Clarke described the approach endorsed in that
case of looking beyond the terms of any written agreement to the parties’ “true
agreement” as “a purposive approach to the problem”.
Restrictions on contracting out
Such an approach is further justified by the fact that all the relevant statutes
or statutory regulations conferring rights on workers contain prohibitions against
contracting out. Thus, section 203(1) of the Employment Rights Act 1996 provides:
“Any provision in an agreement (whether a contract of
employment or not) is void in so far as it purports –
Page 24
(a) to exclude or limit the operation of any provision
of this Act, or
(b) to preclude a person from bringing any
proceedings under this Act before an employment
tribunal.”
Section 49(1) of the National Minimum Wage Act 1998 and regulation 35(1) of the
Working Time Regulations 1998 are in similar terms.
These provisions, as I read them, apply to any provision in an agreement
which can be seen, on an objective consideration of the facts, to have as its object
excluding or limiting the operation of the legislation. It is just as inimical to the aims
of the legislation to allow its protection to be limited or excluded indirectly by the
terms of a contract as it is to allow that to be done in direct terms.
Take, for example, the following provisions contained, respectively, in
clauses 2.3 and 2.4 of the Services Agreement:
“Customer acknowledges and agrees that Customer’s provision
of Transportation Services to Users creates a legal and direct
business relationship between Customer and the User, to which
neither Uber [BV] nor any of its Affiliates in the Territory is a
party. …”
“… Uber and its Affiliates in the Territory do not, and shall not
be deemed to, direct or control Customer or its Drivers
generally or in their performance under this Agreement
specifically, including in connection with the operation of
Customer’s business, the provision of Transportation Services,
the acts or omissions of Drivers, or the operation and
maintenance of any Vehicles.”
It is arguable that these provisions are in any case ineffective, as it is for the courts
and not the parties (still less someone who is not a party) to determine the legal
effect of a contract and whether it falls within one legal category or another: see eg
Street v Mountford [1985] AC 809, 819.
If or in so far, however, as these contractual provisions purport to agree
matters of fact rather than law, then (leaving aside the fact that the relevant
Page 25
“Affiliates” including Uber London were not parties to the agreement) Uber would
no doubt seek to rely on case law which has recognised a principle of “contractual
estoppel” – whereby parties can bind themselves by contract to accept a particular
state of affairs even if they know that state of affairs to be untrue: see eg First Tower
Trustees Ltd v CDS (Superstores International) Ltd [2018] EWCA Civ 1396; [2019]
1 WLR 637, para 47. This would preclude a driver from asserting in any legal
proceedings that he is performing transportation services for or under a contract with
any Uber company or that he is directed or controlled in connection with the
provision of transportation services by any Uber company. The result – which was
patently the drafter’s intention – would be to prevent a driver from claiming that he
falls within the statutory definition of a “worker” so as to qualify for the rights
conferred on workers by statutory provisions such as those contained in the National
Minimum Wage Act 1998. As such, these provisions in the agreement are just as
much provisions which purport to exclude or limit the operation of the legislation as
would be a term stating that “Customer acknowledges and agrees that Customer is
not and shall not be deemed to be a ‘worker’ for the purposes of the National
Minimum Wage Act 1998” or a term stating that “Customer acknowledges and
agrees that, notwithstanding the provisions of the National Minimum Wage Act
1998, Customer shall not be entitled to be paid the national minimum wage.” In each
case the object of the provision is the same. Consequently, in determining whether
drivers are entitled under the provisions of the 1998 Act to be paid the national
minimum wage, section 49(1) of the Act renders the clauses quoted above void. The
same applies to all other provisions in the Services Agreement which can be seen to
have as their object precluding a driver from claiming rights conferred on workers
by the applicable legislation.
Applying the definition of a “worker”
If, as I conclude, the way in which the relevant relationships are characterised
in the written agreements is not the appropriate starting point in applying the
statutory definition of a “worker”, how is the definition to be applied?
In the Autoclenz case it was said (at para 35) that “the true agreement will
often have to be gleaned from all the circumstances of the case, of which the written
agreement is only a part.” More assistance is provided by the decision of the House
of Lords in Carmichael v National Power plc [1999] 1 WLR 2042. That case
concerned tour guides engaged to act “on a casual as required basis”. The guides
later claimed to be employees and therefore entitled by statute to a written statement
of their terms of employment. Their case was that an exchange of correspondence
between the parties in March 1989 constituted a contract, which was to be classified
as a contract of employment. The industrial tribunal rejected this case and found
that, when not working as guides, the claimants were not in any contractual
relationship with the respondent. The tribunal made this finding on the basis of: (a)
the language of the correspondence; (b) the way in which the relationship had
Page 26
operated; and (c) evidence of the parties as to their understanding of it. The House
of Lords held that this was the correct approach. Lord Irvine of Lairg LC said at p
2047C that:
“… it would only be appropriate to determine the issue in these
cases solely by reference to the documents in March 1989, if it
appeared from their own terms and/or from what the parties
said or did then, or subsequently, that they intended them to
constitute an exclusive memorial of their relationship. The
industrial tribunal must be taken to have decided that they were
not so intended but constituted one, albeit important, relevant
source of material from which they were entitled to infer the
parties’ true intention …”
In the Carmichael case there was no formal written agreement. The Autoclenz
case shows that, in determining whether an individual is an employee or other
worker for the purpose of the legislation, the approach endorsed in the Carmichael
case is appropriate even where there is a formal written agreement (and even if the
agreement contains a clause stating that the document is intended to record the entire
agreement of the parties). This does not mean that the terms of any written
agreement should be ignored. The conduct of the parties and other evidence may
show that the written terms were in fact understood and agreed to be a record,
possibly an exclusive record, of the parties’ rights and obligations towards each
other. But there is no legal presumption that a contractual document contains the
whole of the parties’ agreement and no absolute rule that terms set out in a
contractual document represent the parties’ true agreement just because an
individual has signed it. Furthermore, as discussed, any terms which purport to
classify the parties’ legal relationship or to exclude or limit statutory protections by
preventing the contract from being interpreted as a contract of employment or other
worker’s contract are of no effect and must be disregarded.
This last point provides one rationale for the conclusion reached in the
Autoclenz case itself. The findings of the employment tribunal justified the inference
that the terms of the written agreements which stated that the claimants were
subcontractors and not employees of Autoclenz, that they were not obliged to
provide services to the company, nor was the company obliged to offer work to
them, and that they could provide suitably qualified substitutes to carry out the work
on their behalf, had all been inserted with the object of excluding the operation of
employment legislation including the National Minimum Wage Act 1998 and the
Working Time Regulations 1998. Those provisions in the agreements were therefore
void.
Page 27
In determining whether an individual is a “worker”, there can, as Baroness
Hale said in the Bates van Winkelhof case at para 39, “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 is necessary both to view the facts realistically
and to keep in mind the purpose of the legislation. As noted earlier, the
vulnerabilities of workers which create the need for statutory protection are
subordination to and dependence upon another person in relation to the work done.
As also discussed, a touchstone of such subordination and dependence is (as has
long been recognised in employment law) the degree of control exercised by the
putative employer over the work or services performed by the individual concerned.
The greater the extent of such control, the stronger the case for classifying the
individual as a “worker” who is employed under a “worker’s contract”.
This approach is also consistent with the case law of the CJEU which, as
noted at para 72 above, treats the essential feature of a contract between an employer
and a worker as the existence of a hierarchical relationship. In a recent judgment the
Grand Chamber of the CJEU has emphasised that, in determining whether such a
relationship exists, it is necessary to take account of the objective situation of the
individual concerned and all the circumstances of his or her work. The wording of
the contractual documents, while relevant, is not conclusive. It is also necessary to
have regard to how relevant obligations are performed in practice: see AFMB Ltd v
Raad van bestuur van de Sociale verzekeringsbank (Case C-610/18)
EU:C:2020:565; [2020] ICR 1432, paras 60-61.
Section 28(1) of the National Minimum Wage Act establishes a presumption
that an individual qualifies for the national minimum wage unless the contrary is
established. This is not a case, however, which turns on the burden of proof.
Status of the claimants in this case
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 these circumstances it is not suggested on their behalf that they
performed their services under what is 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. But 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.
Page 28
Equally, it is well established and not disputed by Uber that the fact that an
individual is entirely free to work or not, and owes no contractual obligation to the
person for whom the work is performed when not working, does not preclude a
finding that the individual is a worker, or indeed an employee, at the times when he
or she is working: see eg McMeechan v Secretary of State for Employment [1997]
ICR 549; Cornwall County Council v Prater [2006] EWCA Civ 102; [2006] ICR
As Elias J (President) said in James v Redcats (Brands) Ltd [2007] ICR 1006,
para 84:
“Many casual or seasonal workers, such as waiters or fruit
pickers or casual building labourers, will periodically work for
the same employer but often neither party has any obligations
to the other in the gaps or intervals between engagements.
There is no reason in logic or justice why the lack of worker
status in the gaps should have any bearing on the status when
working. There may be no overarching or umbrella contract,
and therefore no employment status in the gaps, but that does
not preclude such a status during the period of work.”
I agree, subject only to the qualification that, where an individual only works
intermittently or on a casual basis for another person, that may, depending on the
facts, tend to indicate a degree of independence, or lack of subordination, in the
relationship while at work which is incompatible with worker status: see Windle v
Secretary of State for Justice [2016] EWCA Civ 459; [2016] ICR 721, para 23.
In many cases it is not in dispute that the claimant is doing work or
performing services personally for another person but there is an issue as to whether
that person is to be classified as the claimant’s employer or as a client or customer
of the claimant. The situation in the present case is different in that there are three
parties involved: Uber, drivers and passengers. But the focus must still be on the
nature of the relationship between drivers and Uber. The principal relevance of the
involvement of third parties (ie passengers) is 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 is who determines the price
charged to the passenger. More generally, it is necessary to consider who is
responsible for defining and delivering the service provided to passengers. A further
and related factor is the extent to which the arrangements with passengers afford
drivers the potential to market their own services and develop their own independent
business.
In all these respects, the findings of the employment tribunal justified its
conclusion that, although free to choose when and where they worked, at times when
Page 29
they are working drivers work for and under contracts with Uber (and, specifically,
Uber London). Five aspects of the tribunal’s findings are worth emphasising.
First and of major importance, the remuneration paid to drivers for the work
they do is fixed by Uber and the drivers have no say in it (other than by choosing
when and how much to work). Unlike taxi fares, fares for private hire vehicles in
London are not set by the regulator. However, for rides booked through the Uber
app, it is Uber that sets the fares and drivers are not permitted to charge more than
the fare calculated by the Uber app. The notional freedom to charge a passenger less
than the fare set by Uber is of no possible benefit to drivers, as any discount offered
would come entirely out of the driver’s pocket and the delivery of the service is
organised so as to prevent a driver from establishing a relationship with a passenger
that might generate future custom for the driver personally (see the fifth point,
discussed below). Uber also fixes the amount of its own “service fee” which it
deducts from the fares paid to drivers. Uber’s control over remuneration further
extends to the right to decide in its sole discretion whether to make a full or partial
refund of the fare to a passenger in response to a complaint by the passenger about
the service provided by the driver (see para 20 above).
Second, the contractual terms on which drivers perform their services are
dictated by Uber. Not only are drivers required to accept Uber’s standard form of
written agreement but the terms on which they transport passengers are also imposed
by Uber and drivers have no say in them.
Third, although drivers have the freedom to choose when and where (within
the area covered by their PHV licence) to work, once a driver has logged onto the
Uber app, a driver’s choice about whether to accept requests for rides is constrained
by Uber. Unlike taxi drivers, PHV operators and drivers are not under any regulatory
obligation to accept such requests. Uber itself retains an absolute discretion to accept
or decline any request for a ride. Where a ride is offered to a driver through the Uber
app, however, Uber exercises control over the acceptance of the request by the driver
in two ways. One is by controlling the information provided to the driver. The fact
that the driver, when informed of a request, is told the passenger’s average rating
(from previous trips) allows the driver to avoid low-rated passengers who may be
problematic. Notably, however, the driver is not informed of the passenger’s
destination until the passenger is picked up and therefore has no opportunity to
decline a booking on the basis that the driver does not wish to travel to that particular
destination.
The second form of control is exercised by monitoring the driver’s rate of
acceptance (and cancellation) of trip requests. As described in para 18 above, a
driver whose percentage rate of acceptances falls below a level set by Uber London
(or whose cancellation rate exceeds a set level) receives an escalating series of
Page 30
warning messages which, if performance does not improve, leads to the driver being
automatically logged off the Uber app and shut out from logging back on for ten
minutes. This measure was described by Uber in an internal document quoted by the
employment tribunal as a “penalty”, no doubt because it has a similar economic
effect to docking pay from an employee by preventing the driver from earning
during the period while he is logged out of the app. Uber argues that this practice is
justified because refusals or cancellations of trip requests cause delay to passengers
in finding a driver and lead to customer dissatisfaction. I do not doubt this. The
question, however, is not whether the system of control operated by Uber is in its
commercial interests, but whether it places drivers in a position of subordination to
Uber. It plainly does.
Fourth, Uber exercises a significant degree of control over the way in which
drivers deliver their services. The fact that drivers provide their own car means that
they have more control than would most employees over the physical equipment
used to perform their work. Nevertheless, Uber vets the types of car that may be
used. Moreover, the technology which is integral to the service is wholly owned and
controlled by Uber and is used as a means of exercising control over drivers. Thus,
when a ride is accepted, the Uber app directs the driver to the pick-up location and
from there to the passenger’s destination. Although, as mentioned, it is not
compulsory for a driver to follow the route indicated by the Uber app, customers
may complain if a different route is chosen and the driver bears the financial risk of
any deviation from the route indicated by the app which the passenger has not
approved (see para 8 above).
I have already mentioned the control exercised by monitoring a driver’s
acceptance and cancellation rates for trips and excluding the driver temporarily from
access to the Uber app if he fails to maintain the required rates of acceptance and
non-cancellation. A further potent method of control is the use of the ratings system
whereby passengers are asked to rate the driver after each trip and the failure of a
driver to maintain a specified average rating will result in warnings and ultimately
in termination of the driver’s relationship with Uber (see paras 13 and 18 above). It
is of course commonplace for digital platforms to invite customers to rate products
or services. Typically, however, such ratings are merely made available as
information which may assist customers in choosing which product or service to
buy. Under such a system the incentive for the supplier of the product or service to
gain high ratings is simply the ordinary commercial incentive of satisfying
customers in the hope of attracting future business. The way in which Uber makes
use of customer ratings is materially different. The ratings are not disclosed to
passengers to inform their choice of driver: passengers are not offered a choice of
driver with, for example, a higher price charged for the services of a driver who is
more highly rated. Rather, the ratings are used by Uber purely as an internal tool for
managing performance and as a basis for making termination decisions where
customer feedback shows that drivers are not meeting the performance levels set by
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Uber. This is a classic form of subordination that is characteristic of employment
relationships.
A fifth significant factor is that Uber restricts communication between
passenger and driver to the minimum necessary to perform the particular trip and
takes active steps to prevent drivers from establishing any relationship with a
passenger capable of extending beyond an individual ride. As mentioned, when
booking a ride, a passenger is not offered a choice among different drivers and their
request is simply directed to the nearest driver available. Once a request is accepted,
communication between driver and passenger is restricted to information relating to
the ride and is channelled through the Uber app in a way that prevents either from
learning the other’s contact details. Likewise, collection of fares, payment of drivers
and handling of complaints are all managed by Uber in a way that is designed to
avoid any direct interaction between passenger and driver. A stark instance of this
is the generation of an electronic document which, although styled as an “invoice”
from the driver to the passenger, is never sent to the passenger and, though available
to the driver, records only the passenger’s first name and not any further details (see
para 10 above). Further, drivers are specifically prohibited by Uber from exchanging
contact details with a passenger or contacting a passenger after the trip ends other
than to return lost property (see para 12 above).
Taking these factors together, it can be seen that the transportation service
performed by drivers and offered to passengers through the Uber app is very tightly
defined and controlled by Uber. Furthermore, it is designed and organised in such a
way as to provide a standardised service to passengers in which drivers are perceived
as substantially interchangeable and from which Uber, rather than individual drivers,
obtains the benefit of customer loyalty and goodwill. From the drivers’ point of
view, the same factors – in particular, the inability to offer a distinctive service or to
set their own prices and Uber’s control over all aspects of their interaction with
passengers – mean that they have little or no ability to improve their economic
position through professional or entrepreneurial skill. In practice the only way in
which they can increase their earnings is by working longer hours while constantly
meeting Uber’s measures of performance.
I would add that the fact that some aspects of the way in which Uber operates
its business are required in order to comply with the regulatory regime – although
many features are not – cannot logically be, as Uber has sought to argue, any reason
to disregard or attach less weight to those matters in determining whether drivers
are workers. To the extent that forms of control exercised by Uber London are
necessary in order to comply with the law, that merely tends to show that an
arrangement whereby drivers contract directly with passengers and Uber London
acts solely as an agent is not one that is legally available.
Page 32
Booking agents
It is instructive to compare Uber’s method of operation and relationship with
drivers with digital platforms that operate as booking agents for suppliers of, for
example, hotel or other accommodation. There are some similarities. For example,
a platform through which customers can book accommodation is likely to have
standard written contract terms that govern its relationships with suppliers and with
customers. It will typically handle the collection of payment and deduct a service
fee which it fixes. It may require suppliers to comply with certain rules and standards
in relation to the accommodation offered. It may handle complaints and reserve the
right to determine whether a customer or supplier should compensate the other if a
complaint is upheld.
Nevertheless, such platforms differ from Uber in how they operate in several
fundamental ways. Notably, the accommodation offered is not a standardised
product defined by the platform. Customers are offered a choice among a variety of
different hotels or other types of accommodation (as the case may be), each with its
own distinctive characteristics and location. Suppliers are also responsible for
defining and delivering whatever level of service in terms of comfort and facilities
etc they choose to offer. Apart from the service fee, it is, crucially, the supplier and
not the platform which sets the price. The platform may operate a ratings system but
the ratings are published in order to assist customers in choosing among different
suppliers; they are not used as a system of internal performance measurement and
control by the platform over suppliers. Nor does the platform restrict communication
between the supplier and the customer or seek to prevent them from dealing directly
with each other on a future occasion. The result of these features is that suppliers of
accommodation available for booking through the platform are in competition with
each other to attract business through the price and quality of the service they supply.
They are properly regarded as carrying on businesses which are independent of the
platform and as performing their services for the customers who purchase those
services and not for the platform.
The Secret Hotels2 case
A platform of this kind was the subject of Secret Hotels2 Ltd (formerly Med
Hotels Ltd) v Revenue and Customs Comrs [2014] UKSC 16; [2014] 2 All ER 685,
a case on which Uber has strongly relied. In that case a company (“Med”) marketed
hotel rooms and holiday accommodation through a website. One difference from the
typical model described above was that Med reserved many hotel rooms in its own
name, for which it paid in advance. The issue was whether, for the purposes of
assessing liability for VAT in accordance with Directive 2006/112/EC (“the
Principal VAT Directive”), Med was purchasing accommodation from hoteliers and
supplying it to customers as a principal or whether Med fell within a category of
Page 33
persons who “act solely as intermediaries” to whom more favourable tax treatment
applied.
The Supreme Court held that the correct legal analysis of the tripartite
relationship between Med, hoteliers and customers was that Med marketed and sold
hotel accommodation to customers as the agent of the hoteliers and was in these
circumstances acting solely as an intermediary for VAT purposes. In analysing the
relationship, Lord Neuberger of Abbotsbury (with whom the other members of the
court agreed) identified the correct approach at para 34 as follows:
“(i) the right starting point is to characterise the nature of the
relationship between Med, the customer, and the hotel, in the
light of … ‘the contractual documentation’, (ii) one must next
consider whether that characterisation can be said to represent
the economic reality of the relationship in the light of any
relevant facts, and (iii) if so, the final issue is the result of this
characterisation so far as article 306 [of the Principal VAT
Directive] is concerned.”
Secret Hotels2 was not an employment case: it concerned the classification
of a relationship for VAT purposes. In applying the VAT legislation, the proper
approach – established by binding decisions of the CJEU cited at paras 22-29 of the
judgment in Secret Hotels2 – is informed by the policy that “taxable persons are
generally free to choose the organisational structures and the form of transactions
which they consider to be most appropriate for their economic activities and for the
purposes of limiting their tax burdens”, albeit that this is subject to an exception for
“abusive transactions”: see Revenue and Customs Comrs v RBS Deutschland
Holdings GmbH (Case C-277/09) EU:C:2010:810; [2011] STC 345, para 53, cited
by Lord Neuberger in Secret Hotels2 at para 24. I have already explained why a
different approach is required in applying the employment legislation invoked in the
present case, which is underpinned by different policy considerations.
That said, even if the relationships in the Secret Hotels2 case were viewed
through the lens of employment law, I see no reason to question the analysis that
Med was acting solely as a booking agent for hoteliers. For the reasons given at para
104 above, the manner in which such a platform operates is materially different from
Uber’s business model. Even the practice of reserving hotel rooms in Med’s own
name was, as Lord Neuberger pointed out at para 49 of the judgment, consistent
with its status as an intermediary: a customer who subsequently booked one of the
rooms would not contract with Med, but would contract through Med with the
hotelier; and, if not all reserved rooms were booked by customers at the hotel for the
season in question, the amount paid by Med was carried forward to the next season.
Page 34
In short, I do not consider that the decision of this court in Secret Hotels2 provides
any support for Uber’s case in the present proceedings.
Minicab drivers
I mentioned earlier (at para 48 above) the reliance placed by Uber on two
judicial decisions involving minicab firms which are said to have recognised in an
employment context that such firms may act as booking agents for drivers who
provide transportation services directly to passengers under contracts with
passengers and do not work for the minicab firm. Uber contends that its own
business model is similar to that of such firms, with the principal differences being
only the scale of its operations and the fact that Uber uses software to take bookings
rather than doing so by telephone.
The principal case relied on is Mingeley v Pennock (t/a Amber Cars) [2004]
EWCA Civ 328; [2004] ICR 727, in which the claimant driver brought a claim
against a private hire vehicle operator trading under the name of “Amber Cars”
alleging discrimination on the ground of race. The claimant owned his own vehicle
and was responsible for obtaining a PHV driver’s licence. He was one of some 225
drivers who paid a weekly fee to Amber Cars for access to what was initially a radio
and later a computer system through which trip requests from customers were
allocated to drivers. There was no obligation to work but, when he chose to work,
the driver was obliged to wear a uniform and to apply a fixed scale of charges set by
the operator. He collected and was entitled to keep the full fare paid by the customer.
The operator had a procedure for dealing with complaints from passengers about the
conduct of the driver and had the power to order a refund of the fare to the passenger.
The Court of Appeal affirmed the decision of the employment tribunal that it
had no jurisdiction to hear the claim as the claimant was not “employed” by the
operator within the meaning of section 78 of the Race Relations Act 1976. Maurice
Kay LJ (with whom Sir Martin Nourse and Buxton LJ agreed) regarded it as fatal to
the claim that the claimant was “free to work or not to work at his own whim or
fancy” (para 14) and held that the absence of an obligation to work placed him
beyond the reach of section 78. Buxton LJ gave as an additional reason that, even
when working, a driver was not employed by Amber Cars “under … a contract
personally to execute any work or labour” as his only such obligation was owed to
the passenger.
The definition of “employment” and related expressions in section 78 of the
Race Relations Act 1976 has been substantially replicated in section 83(2)(a) of the
Equality Act 2010, which defines “employment” to include “employment under a
contract of employment, a contract of apprenticeship or a contract personally to do
Page 35
work”. Although not the same as the definition of a “worker” and a “worker’s
contract” in section 230(3) of the 1996 Act, the two definitions have been held to
have substantially the same effect: see Pimlico Plumbers Ltd v Smith [2018] UKSC
29; [2018] ICR 1511, paras 13-15.
It is not necessary for present purposes to express any view on whether the
Mingeley case was correctly decided. I do not accept, however, that the fact that the
claimant in that case was free to work as and when he chose was a sufficient reason
for holding that, at times when he was working, he was not employed under a
contract to do work for the firm. If that conclusion was justified on the facts of the
Mingeley case, it would have to be on the basis that the claimant was not to be
regarded as working for the minicab firm when transporting passengers in
circumstances where the firm did not receive any money in respect of any individual
trip undertaken by him. This arrangement was materially different from Uber’s
business model.
The other employment case involving a minicab firm on which Uber relies is
Khan v Checkers Cars Ltd, an unreported decision of the Employment Appeal
Tribunal handed down on 16 December 2005. The facts were that the British
Airports Authority had granted the respondent firm (“Checkers”) an exclusive
licence to provide a taxi service at Gatwick airport. The firm had a fleet of over 200
drivers, one of whom was the claimant, who plied for hire at the airport taxi-rank.
Checkers took a commission and imposed numerous conditions on its drivers,
including requiring them to charge set fares, use fixed routes and wear a uniform.
Drivers were entirely free to choose whether and when they worked but they were
not permitted to drive for anyone else. The issue was whether the claimant had a
right not to be unfairly dismissed, which depended on showing that he had been
continuously employed by Checkers under a contract of employment for a period of
not less than two years: see section 108 of the Employment Rights Act 1996.
The Employment Appeal Tribunal upheld the finding of the employment
tribunal that the claimant did not satisfy this requirement because the absence of any
obligation to work other than when he chose was inconsistent with the conclusion
that there was any contract of employment which subsisted when the claimant was
not working. Langstaff J, however, also observed, obiter, at para 32 of the judgment:
“If it had been material to our decision, we would have been
inclined to find that …, on the findings of fact that the tribunal
made, the contract went no further than to amount to a licence
by Checkers to permit the claimant to offer himself as a private
hire taxi driver to individual passengers on terms dictated by
the administrative convenience of Checkers and BAA.”
Page 36
Given the extent of the control exercised by Checkers over the manner in which
drivers carried out their work, I cannot agree that such a finding would have been
justified.
In making the observation quoted above, Langstaff J was drawing an analogy
with the facts of Cheng Yuen v Royal Hong Kong Golf Club [1998] ICR 131. In that
case the claimant worked as a caddie for individual members of the respondent golf
club. He was issued by the club with a number, a uniform and a locker. Caddying
work was allocated to available caddies in strict rotation. They were not obliged to
make themselves available for work and received no guarantee of work. The club
was not obliged to give them work or to pay anything other than the amount of the
fee per round owed by the individual golfer for whom they had caddied. On an
appeal to the Privy Council the majority of the Board held that the only reasonable
view of the facts found was that the claimant had not been employed under a contract
of employment by the club either on a continuing basis or separately each time he
agreed to act as a caddie, and that the club did no more than grant him a licence to
enter into contracts with individual golfers on terms dictated by the administrative
convenience of the club and its members. Lord Hoffmann, who dissented, thought
that it was more realistic to regard the claimant as a casual employee of the club,
particularly when (as he observed at p 139) “the claimant had to work for the person
to whom he was allocated according to the club’s system at a rate of pay fixed by
the club and in the manner determined by the club”. Without expressing any view
on the correctness of the decision, I do not consider that this case provides a relevant
analogy in determining whether the employment tribunal was entitled to find that
the claimants in the present case are workers.
In Quashie v Stringfellow Restaurants Ltd [2012] EWCA Civ 1735; [2013]
IRLR 99 the claimant was a lap dancer who performed for the entertainment of
guests at the respondent’s clubs. An important factual finding was that the
respondent was not obliged to pay the claimant any money at all. Rather, the
claimant paid the respondent a fee for each night that she worked. Doing so enabled
her to earn payments from the guests for whom she danced. She negotiated those
payments with the guests and took the risk that on any particular night she might be
out of pocket. The Court of Appeal held that on these facts the employment tribunal
had been entitled to find that the claimant was not employed under a contract of
employment (either for each engagement or on a continuous basis). Again, the facts
were very different from those of the present case and I do not find this decision of
any assistance.
The employment tribunal’s decision
It is firmly established that, where the relationship has to be determined by
an investigation and evaluation of the factual circumstances in which the work is
Page 37
performed, the question of whether work is performed by an individual as an
employee (or a worker in the extended sense) or as an independent contractor is to
be regarded as a question of fact to be determined by the first level tribunal. Absent
a misdirection of law, the tribunal’s finding on this question can only be impugned
by an appellate court (or appeal tribunal) if it is shown that the tribunal could not
reasonably have reached the conclusion under appeal: see Lee Ting Sang v Chung
Chi-Keung [1990] 2 AC 374, 384-385; Clark v Oxfordshire Health Authority [1998]
IRLR 125, paras 38-39; the Quashie case, para 9.
On the facts found in the present case, and in particular those which I have
emphasised at paras 94-101 above, I think it clear that the employment tribunal was
entitled to find that the claimant drivers were “workers” who worked for Uber
London under “worker’s contracts” within the meaning of the statutory definition.
Indeed, that was, in my opinion, the only conclusion which the tribunal could
reasonably have reached.
It does not matter in these circumstances that certain points made by the
employment tribunal in the reasons given for its decision are open to criticism, nor
is it necessary to discuss such particular criticisms, since none of the errors or alleged
errors affects the correctness of the tribunal’s decision. I agree with the majority of
the Court of Appeal that there are some points made by the employment tribunal
which are misplaced (see in particular para 93 of the Court of Appeal’s judgment).
I also agree with the analysis set out at paras 96 and 97 of that judgment of the 13
considerations on which the tribunal principally based its finding that drivers work
for Uber. I agree with the majority of the Court of Appeal that those considerations,
viewed in the round, provided an ample basis for the tribunal’s finding.
Working Time
The secondary question which arises in the light of this conclusion is: during
what periods of time were the claimants working?
The Working Time Regulations 1998 and the National Minimum Wage
Regulations 2015 each contain provisions for measuring working time. But before
those provisions are applied, it is necessary to identify the periods during which the
individual concerned is a “worker” employed under a “worker’s contract” so as to
fall within the scope of the legislation.
As mentioned earlier, the employment tribunal found that a driver was
“working” under such a contract during any period when he (a) had the Uber app
switched on, (b) was within the territory in which he was authorised to use the app,
Page 38
and (c) was ready and willing to accept trips. Uber contends that it was not open to
the tribunal in law to make this finding and that the tribunal should have found that
the claimants (on the assumption that they were “workers” at all) were only working
under workers’ contracts during periods when they were actually driving passengers
to their destinations. Alternatively, Uber contends that the tribunal should have
found that a claimant was only working under such a contract from the moment
when (and not until) he accepted a trip request.
I think it clear – as did all the members of the Court of Appeal, including the
dissenting judge, Underhill LJ, if he was wrong on the main issue – that a driver
enters into, and is working under, a contract with Uber London whereby the driver
undertakes to perform services for Uber London, if not before, then at the latest
when he accepts a trip. If the driver afterwards cancels the trip, that signifies only
that the obligation undertaken to pick up the passenger and carry the passenger to
his or her destination is then terminated. It does not mean that no obligation was
ever undertaken. The more difficult question is whether the employment tribunal
was entitled to find – as by implication it did – that a worker’s contract came into
existence at an earlier stage when a claimant driver logged onto the Uber app.
Uber argues that it is clear from the tribunal’s own findings that drivers when
logged onto the Uber app are under no obligation to accept trips. They are free to
ignore or decline trip requests as often as they like, subject only to the consequence
that, if they repeatedly decline requests, they will be automatically logged off the
Uber app and required to wait for ten minutes before they can log back on again.
Furthermore, when logged onto the Uber app, drivers are at liberty to accept other
work, including driving work offered through another digital platform (see para 16
above). Counsel for Uber submitted that, on these facts, a finding that a driver who
switches on the Uber app undertakes a contractual obligation to work for Uber
London is not rationally sustainable. Nor can the fact that the driver is ready and
willing to accept trips logically alter the position so as to give rise to such an
obligation.
The fact, however, that an individual has the right to turn down work is not
fatal to a finding that the individual is an employee or a worker and, by the same
token, does not preclude a finding that the individual is employed under a worker’s
contract. What is necessary for such a finding is that there should be what has been
described as “an irreducible minimum of obligation”: see Nethermere (St Neots) Ltd
v Gardiner [1984] ICR 612, 623 (Stephenson LJ), approved by the House of Lords
in Carmichael v National Power plc [1999] 1 WLR 2042, 2047. In other words, the
existence and exercise of a right to refuse work is not critical, provided there is at
least an obligation to do some amount of work.
Page 39
In the present case Uber London in the Welcome Packet of material issued to
new drivers referred to logging onto the Uber app as “going on duty” and instructed
drivers that: “Going on duty means you are willing and able to accept trip requests”
(see para 17 above). Logging onto the Uber app was thus presented by Uber London
itself to drivers as undertaking an obligation to accept work if offered. The
employment tribunal also found that the third in the graduated series of messages
sent to a driver whose acceptance rate of trip requests fell below a prescribed level
included a statement that “being online with the Uber app is an indication that you
are available to take trips, in accordance with your Services Agreement.” The
reference in this message to the Services Agreement must have been to clause 2.6.2,
which stated:
“Customer acknowledges and agrees that repeated failure by a
Driver to accommodate User requests for Transportation
Services while such Driver is logged in to the Driver App
creates a negative experience for Users of Uber’s mobile
application. Accordingly, Customer agrees and shall ensure
that if a Driver does not wish to provide Transportation
Services for a period of time, such Driver will log off of the
Driver App.”
Counsel for the third respondent suggested that this clause is inconsistent
with clause 2.4 of the Services Agreement, which provided that:
“Customer and its Drivers retain the option, via the Driver App,
to decline or ignore a User’s request for Transportation
Services via the Uber Services, or to cancel an accepted request
… subject to Uber’s then-current cancellation policies.”
I do not agree that these clauses are inconsistent. The position both as specified in
the Services Agreement and in practice was that, on the one hand, a driver while
logged onto the Uber app was free to decline or ignore any individual trip request
(and might well, for example, choose to do so if the request came from a passenger
with a low rating). But, on the other hand, the driver was required to be generally
willing and available to take trips, and a repeated failure by a driver to accept trip
requests was treated as a breach of that requirement.
Whilst the irreducible minimum of obligation on drivers to accept work was
not precisely defined in the Services Agreement, the employment tribunal was
entitled to conclude that it was in practice delineated by Uber’s criteria for logging
drivers off the Uber app if they failed to maintain a prescribed rate of acceptances.
Uber seeks to characterise this system as merely a way of seeking to ensure that
Page 40
drivers do not remain logged onto the app, perhaps through inadvertence whilst
away from their vehicle, at times when they are not in fact available to work.
However, if that were the only purpose of automatically logging off a driver, it is
hard to see why the driver should then be shut out from logging back onto the Uber
app for a ten-minute period. It was open to the tribunal on the evidence, including
Uber’s internal documents, to find that this exclusion from access to the app was
designed to operate coercively and that it was reasonably perceived by drivers, and
was intended by Uber to be perceived, as a penalty for failing to comply with an
obligation to accept a minimum amount of work.
It follows that the employment tribunal was, in my view, entitled to conclude
that, by logging onto the Uber app in London, a claimant driver came within the
definition of a “worker” by entering into a contract with Uber London whereby he
undertook to perform driving services for Uber London. I do not consider that the
third condition identified by the tribunal that the driver was in fact ready and willing
to accept trips can properly be regarded as essential to the existence of a worker’s
contract; nor indeed did the tribunal assert that it was. But it is reasonable to treat it,
as the tribunal did, as a further condition which must be satisfied in order to find that
a driver is “working” under such a contract.
This brings me to the question of what periods during which a driver is
employed under a worker’s contract count as working time.
The Working Time Regulations
For the purpose of the Working Time Regulations 1998, “working time” is
defined in regulation 2(1), in relation to a worker, as “any period during which he is
working, at his employer’s disposal and carrying out his activity or duties”.
There is no difficulty in principle in a finding that time when a driver is “on
call” falls within this definition. A number of decisions of the CJEU establish that,
for the purpose of the Working Time Directive, to which the UK Regulations aim to
give effect and which defines “working time” in the same way, time spent on call
counts as “working time” if the worker is required to be at or near his or her place
of work. For example, in Ville de Nivelles v Matzak (Case C-518/15) EU:C:2018:82;
[2018] ICR 869 the CJEU held that time spent by firefighters on stand-by at their
homes, which were required to be within eight minutes travelling distance of the fire
station, was working time.
On the facts of the present case, a driver’s place of work is wherever his
vehicle is currently located. Subject to the point I consider next, in the light of this
Page 41
case law the tribunal was justified in finding that all time spent by a driver working
under a worker’s contract with Uber London, including time spent “on duty” logged
onto the Uber app in London available to accept a trip request, is “working time”
within the meaning of the Working Time Directive and Regulations.
The point that – like the majority of the Court of Appeal and Judge Eady QC
in the Employment Appeal Tribunal – I have found more difficult is whether a driver
logged onto the Uber app in the area in which he is licensed to work can be said to
be “working, at his employer’s disposal and carrying out his activity or duties” if
during such times the driver is equally ready and willing to accept a trip request
received from another PHV operator. It was argued with force by counsel for Uber
that a driver cannot reasonably be said to be working for and at the disposal of Uber
London if, while logged onto the Uber app, he is also at the same time logged onto
another app provided by a competitor of Uber which operates a similar service.
I have concluded that this question cannot be answered in the abstract. I agree
with Judge Eady QC when she said in her judgment dismissing Uber’s appeal to the
Employment Appeal Tribunal (at para 126) that it is a matter of fact and degree.
Like the majority of the Court of Appeal, I also agree with her that:
“If the reality is that Uber’s market share in London is such that
its drivers are, in practical terms, unable to hold themselves out
as available to any other PHV operator, then, as a matter of fact,
[when they have the Uber app switched on] they are working
at [Uber London’s] disposal as part of the pool of drivers it
requires to be available within the territory at any one time. …
if, however, it is genuinely the case that drivers are able to also
hold themselves out as at the disposal of other PHV operators
when waiting for a trip, the same analysis would not apply.”
So far as this court has been shown, no evidence was adduced at the hearing
in the employment tribunal in 2016 that there was at that time 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 was made by
the tribunal on this subject. In these circumstances I do not consider that the tribunal
was wrong to find that periods during which its three conditions were met
constituted “working time” for the purpose of the Working Time Regulations 1998.
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The National Minimum Wage Regulations
What counts as working time for the purposes of the right to be paid the
national minimum wage is defined by the National Minimum Wage Regulations
These regulations contain complex provisions for measuring hours worked
depending on how the work is classified. Before the employment tribunal there was
an issue as to whether a driver’s working hours should be classified as “time work”,
as Uber argued, or as “unmeasured work”, as the tribunal held. It was accepted by
Uber that “time work” could only be the appropriate category if the driver is working
only when carrying a passenger and not otherwise. As I have concluded that the
tribunal was entitled to reject that contention, it follows that the tribunal was also
entitled to find that the claimants’ 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 follows that the tribunal was entitled to find that
they constituted “unmeasured work”, which is a residual or default category. On this
point too, therefore, there is no basis for interfering with the employment tribunal’s
decision.
Conclusion
For all the reasons given, I would dismiss this appeal.
Postscript
After the hearing of the appeal but before this judgment was handed down,
Lord Kitchin fell ill and it was uncertain when he would return to work. With the
agreement of the parties, the presiding judge, Lord Reed, gave a direction under
section 43(3) of the Constitutional Reform Act 2005 that the court was still duly
constituted by the remaining six Justices, all of whom are permanent judges.