Uber BV v Aslam

The employment tribunal unanimously held that Mr Aslam and Mr Farrar were "workers" within the definition in s.230(3)(b) of the Employment Rights Act 1996, and were thus entitled to the minimum wage and holiday pay. The tribunal did not specify whether the claimants were also employees.

As to Uber's tactics in pursuing its case, the Tribunal observed:

This is, we think, an excellent illustration of the phenomenon of which Elias J warned in the Kalwak case of "armies of lawyers" contriving documents in their clients' interests which simply misrepresent the true rights and obligations on both sides.[1]

The Tribunal gave the following reasons for arriving at its decision:[2]

1. An organisation resorting in its documentation to fictions, twisted language and even brand new terminology, merited a degree of scepticism.
2. There were many things said and written in the name of Uber in unguarded moments, which reinforce the Claimants' simple case that the organisation runs a transportation business and employs the drivers to that end.
3. It is unreal to deny that Uber is in business as a supplier of transportation services.
4. Uber's general case and the written terms on which they rely do not correspond with the practical reality.
5. The logic of Uber's case became all the more difficult as it was developed.
6. It was not real to regard Uber as working "for" the drivers and that the only sensible interpretation is that the relationship was the other way around.
7. The drivers fell full square within the terms of the 1996 Act, s 230(3)(b).
8. The guidance in the principal authorities favoured the conclusion.
9. The authorities relied upon by Uber's counsel did not support the conclusion for which he argued.
10. The terms on which Uber rely do not correspond with the reality of the relationship between the organisation and the drivers. Accordingly, the Tribunal is free to disregard them.
11. None of the above reasoning should be taken as doubting that the Respondents could have devised a business model not involving them employing drivers. The Tribunal found only that the model which they chose failed to achieve that aim.

The Employment Appeal Tribunal dismissed the appeal on 10 November 2017.[3] In her ruling, HHJ Eady stated:

I am satisfied the ET did not err either in its approach or in its conclusions when rejecting the contention that the contract was between driver and passenger and that [Uber] was simply the agent in this relationship, providing its services as such to the drivers. Having rejected that characterisation of the relevant relationships, on its findings as to the factual reality of the situation, the ET was entitled to conclude there was a contract between [Uber] and the drivers whereby the drivers personally undertook work for [Uber] as part of its business of providing transportation services to passengers in the London area.[4]

The majority of the Court of Appeal (Sir Terence Etherton MR and Bean LJ) upheld the Employment Appeal Tribunal decision, so that Uber drivers are workers entitled to the minimum wage and paid holidays. The joint majority judgment said the following:

49. There is no dispute that Autoclenz puts paid, at least in an employment context, to the idea that all that matters is the terms of any written contract, with the exception of a document intended by all parties executing it to be a sham. Clearly, however, the case goes a good deal further. We regard as particularly significant Lord Clarke's endorsement of the advice of Aikens LJ to tribunals to be "realistic and worldly wise" in this type of case when considering whether the terms of a written contract reflect the real terms of the bargain between the parties; and of the similar advice of Elias J that tribunals should take a "sensible and robust view of these matters in order to prevent form undermining substance".

50. We also attach importance to the approval given by Lord Clarke to the conclusions drawn by Sedley LJ in this court from what he (Lord Clarke) described as the "critical findings of fact" by Employment Judge Foxwell in the ET. Judge Foxwell noted that the claimants had no say in the terms on which they performed work; the contracts were devised entirely by Autoclenz; and the services they provided were subject to a detailed specification. The claimants had no control over the way in which they did their work. Judge Foxwell's conclusion from the facts was that the "elaborate protestations in the contractual documents that the men were self-employed" bore no practical relation to the reality of the relationship. Consequently, Lord Clarke held, the documents did not reflect the true agreement between the parties. The ET had been entitled to "disregard" the terms of the written documents, insofar as they were inconsistent with the true terms agreed between the parties.

[The judgment discussed the UK Supreme Court case of Secret Hotels2 relied upon by counsel for Uber and continued.]

53. Autoclenz was not mentioned in the judgment, nor even apparently cited in argument, in Secret Hotels2. The latter is obviously not an employment case and there was no suggestion that the written terms misrepresented what was occurring on the ground. There was undoubtedly a contract between the company and each hotel, in contrast to the present case where Uber seek to argue that there is no contractual relationship between the drivers and ULL.

54. In the course of supplementary oral submissions Ms Rose argued that Autoclenz could not be used to disregard the Rider Terms, since these were a contract between passenger and driver, not an employment contract in any sense. Instead, she said, we should follow Secret Hotels2. We disagree. Autoclenz holds that the Court can disregard the terms of any contract created by the employer in so far as it seeks to characterise the relationship between the employer and the individuals who provide it with services (whether employees or workers) in a particular artificial way. Otherwise employers would simply be able to evade the consequences of Autoclenz by the creation of more elaborate contrivances involving third parties.

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69. Ms Rose also placed reliance on Stringfellow Restaurants Ltd v Quashie [2013] IRLR 99 CA; [2012] EWCA Civ 1735. That again was not a case about "worker" status but about whether the claimant was an employee or an independent contractor. The claimant was a lap dancer who performed for the entertainment of guests at the respondents' clubs. She paid the respondent a fee for each night worked. Doing so enabled her to earn substantial payments from the guests for whom she danced. She negotiated those payments with the guests. The respondent ended its working relationship with her and she complained of unfair dismissal. At a preliminary hearing, an ET held that there was no contract of employment. The EAT disagreed but the Court of Appeal restored the first instance decision. Elias LJ gave the only substantive judgment. After discussing the Cheng Yuen case, he said this:

50. ... The club did not employ the dancer to dance; rather she paid them to be provided with an opportunity to earn money by dancing for the clients. The fact that the appellant also derived profits from selling food and drink to the clients does not alter that fact. That is not to say that Cheng provides a complete analogy; I accept Mr Hendy's submission that the relationship of the claimant to the club is more integrated than [that of] the caddie with the golf club. It is not simply a licence to work on the premises. But in its essence the tripartite relationship is similar. 51. The fact that the dancer took the economic risk is also a very powerful pointer against the contract being a contract of employment. Indeed, it is the basis of the economic reality test, described above. It is not necessary to go so far as to accept the submission of Mr Linden that absent an obligation on the employer to pay a wage ... the relationship can never as a matter of law constitute a contract of employment. But it would, I think, be an unusual case where a contract of service is found to exist when the worker takes the economic risk and is paid exclusively by third parties. On any view, the Tribunal was entitled to find that the lack of any obligation to pay did preclude the establishment of such a contract here.

70. Central to Elias LJ's conclusion was the finding that the claimant took an economic risk in view of the fixed sums which she had to pay the club irrespective of the number of her customers. As with the golf club case and for similar reasons, we did not find this case of any assistance.

Discussion

71. In our view the ET was not only entitled, but correct, to find that each of the Claimant drivers was working for ULL as a "limb (b) worker".

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When are the drivers workers?

99. If, as the ET found and we accept, the drivers were workers providing their services to ULL, the final question (argued only briefly before us) is at what times they were to be classified as so working. Uber places great emphasis on the fact that its standard terms (whether in the 2013 or the 2015 versions) expressly permit drivers to use other competing apps and to have more than one switched on at the same time. There appears to have been very little evidence before the ET as to how often this occurs in practice.

100. It is common ground that a driver can only be described as providing services to Uber when he is in the Territory (i.e., for present purposes, in London) and has the Uber App switched on. The Claimants contended, and the ET found, that they were providing services to ULL throughout the time when they satisfied these requirements. Uber submitted that, if (contrary to its primary submissions) the drivers were providing services to ULL, it could only be during each ride, that is to say from the time the passenger is picked up until the time the car reaches the passenger's destination. A middle course is to say that the driver is providing services to ULL from the moment he accepts the booking until the end of the passenger's journey but not when (in the words of counsel) he is simply circling around waiting for a call.

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Final general observation

105. In the section headed "Broader Considerations" at the end of his judgment Underhill LJ refers to current debate, quotes from an article by Sir Patrick Elias, refers to the Taylor Review and the consultation on the issues raised by the Review, and concludes that, if any change is to be made to what he concludes is the legal answer in the present case, it should be left to Parliament. None of those documents and developments was referred to in the oral or written submissions before us and we do not consider that it would be appropriate to engage with what Underhill LJ writes about them. At the end of the day, the differences between ourselves and Underhill LJ on the main issue turn on two broad matters, one primarily a matter of law and the other primarily a matter of fact. The former concerns the extent to which Autoclenz permits the court to ignore written contractual terms which do not reflect what reasonable people would consider to be the reality. The latter concerns the question as to what reasonable people would consider to be the reality of the actual working relationship between Uber and its drivers. We consider that the extended meaning of "sham" endorsed in Autoclenz provides the common law with ample flexibility to address the convoluted, complex and artificial contractual arrangements, no doubt formulated by a battery of lawyers, unilaterally drawn up and dictated by Uber to tens of thousands of drivers and passengers, not one of whom is in a position to correct or otherwise resist the contractual language. As to the reality, not only do we see no reason to disagree with the factual conclusions of the ET as to the working relationship between Uber and the drivers, but we consider that the ET was plainly correct.

Underhill LJ dissented, saying the following.

164. The question whether those who provide personal services through internet platforms similar to that operated by Uber[15] should enjoy some or all of the rights and protections that come with worker status is a very live one at present. There is a widespread view that they should, because of the degree to which they are economically dependent on the platform provider. My conclusion that the Claimants are not workers does not depend on any rejection of that view. It is based simply on what I believe to be the correct construction of the legislation currently in force. If on that basis the scope of protection does not go far enough the right answer is to amend the legislation. Courts are anxious so far as possible to adapt the common law to changing conditions, but the tools at their disposal are limited, particularly when dealing with statutory definitions. I have already explained why I do not think that Autoclenz can be treated as a tool to re-write any disadvantageous contractual provision that results from the disparity of bargaining power between (putative) employer and (putative) worker: in cases of the present kind the problem is not that the written terms mis-state the true relationship but that the relationship created by them is one that the law does not protect. Abuse of superior bargaining power by the imposition of unreasonable contractual terms is of course a classic area for legislative intervention, and not only in the employment field.

165. A similar point is made by Sir Patrick Elias in his recent article in the Oxford Journal of Legal Studies, Changes and Challenges to the Contract of Employment, in the context of the analogous question of zero-hours contracts. He says, at p. 16:

There is no doubt that zero-hours contracts are a matter of very great concern. This is because they are often—although not always—cynically constructed agreements, framed by the employer in order to avoid their legal duties. I do not believe that the common law can successfully deal with them alone. Autoclenz allows a court to deal with the cases where the agreement is a sham, but the problems arise when it genuinely reflects the way in which the contract is performed, although the worker would choose that the contract were otherwise. The courts cannot simply ignore express terms or apply some general doctrine of unconscionability to invalidate a contract because of unequal bargaining power.

166. Even if it were open to the Courts to seek to fashion a common law route to affording protection to Uber drivers and others in the same position, I would be cautious about going down that road. The whole question of whether and how to adapt existing employment law protections to the development of the so-called gig economy, and in particular to the use of service-provision platforms such as Uber, is under active review by the Government at present.