After a preliminary hearing spanning seven days (including reading the five-volume bundle and time for deliberation), an Employment Tribunal has handed down its much anticipated ruling that Uber drivers are workers rather than independent contractors. The drivers can, therefore, benefit from statutory protections. These include: 5.6 weeks’ paid annual leave each year; a maximum 48-hour average working week (without an opt-out); rest breaks; the National Minimum Wage or potentially the National Living Wage, and the protection of whistleblowing legislation.

The Tribunal examined in detail Uber’s business model but rejected Uber’s assertion that it is a provider of technology services rather than transport services. Passengers book a taxi via the Uber app and Uber drivers then decide (although the complete autonomy of this decision was questioned in this case) whether to drive that passenger to their destination and, if they do, the route taken. The passenger pays the fare to Uber by credit or debit card, Uber takes a 25 per cent service fee, and pays the balance of fares to the driver once a week.

The Tribunal looked at how the arrangement works in reality, rather than as described in Uber’s contracts, to decide whether the drivers are workers as opposed to independent contractors. For example, the Tribunal noted that if a driver declines three trips in a row while logged on to the app and so is ostensibly available to work, the app will forcibly log him/her out for 10 minutes. The Tribunal also noted that Uber bans drivers from agreeing a higher fare with a passenger than is set by Uber and that Uber usually pays for any cleaning if a passenger soils a car.

In summary, the Tribunal decided that Uber is a taxi service and employs drivers to provide that service in a way which, in several key respects, Uber controls. Consequently, the drivers fell within the statutory definition of a worker, as they worked under contracts to personally perform services for another party (Uber) that is not a customer of a business undertaking carried on by them. However, we note that this contract did not actually exist (as no express agreement was in place) but the Tribunal inferred one from the facts as found by it. It may be that the scope for doing so will be one ground on which Uber appeals against the Tribunal’s judgment.

The Tribunal found that, while drivers can turn off the app and be dormant drivers, once the app is on, the driver has a licence to operate and is able and willing to accept assignments. Once this happens, the driver is on working time until one of those conditions stops applying.

For the purposes of the National Minimum Wage Regulations, the Tribunal stated that the work carried out by drivers is not “time work” or “output work”. This is because the driver’s right to pay is not limited to when he is carrying a passenger and does not depend on him completing a particular number of trips. Accordingly, the work was classified as “unmeasured work”. This means that pay is likely to be calculated by reference to time when the driver is logged in to the app in his licensed territory and ready for passengers, not just the time spent driving passengers to their destinations.

This decision is fact-specific. Further, Uber has already announced its plan to appeal against it. The outcome is however likely to have wide-ranging implications for the gig economy, which claims to benefit individuals by giving them flexibility to work how, when and for whoever they please, in an increasingly interconnected and digitally virtual employment sphere.

The employment landscape is changing rapidly and the challenges to the existing statutory framework presented by the Uber case show the law might need to change to keep up. In support of its decision, the Tribunal cited an earlier judgment which identified the policy behind the definition of “worker” is to extend statutory protection to individuals who are vulnerable to exploitation in the same way as employees. While not a new issue, as shown by case law referred to in the Uber judgment, perhaps social policy and the law which reflects it need to change due to the rise of the gig economy and its associated benefits for those seeking flexibility. This is an area where many businesses will keep a close eye for developments.