A year in the life of employment status claims

As Uber loses its latest appeal, Yvonne Gallagher reviews a busy year for gig economy workers fighting for employment status recognition

Pcitured above: Former Uber drivers James Farrar and Yaseen Aslam  

The year has come to a close with yet more High Court decisions in relation to the vexed subject of employment status. These concern an application by riders and drivers working for Deliveroo, who were seeking compulsory recognition of a trade union, and the judgment this Wednesday of the Court of Appeal in the Uber case.

To be entitled to require trade union recognition, the Deliveroo riders had to demonstrate they are either workers or employees. The definition of worker used for this purpose is the same as that used in other aspects of employment law, namely that “the individual must work under a contract whereby he undertakes to do or perform personally any work or services for another party to the contract who is not a professional client of his”. The Deliveroo drivers argued that they were workers.

The Central Arbitration Committee (CAC), which deals with applications for compulsory recognition, turned down the application on the basis that the riders were not workers because the contract between riders and Deliveroo entitled riders to arrange for another person to carry out their services – a right of substitution. 

The courts are alive to the fact that some contractual substitution provisions are no more than shams, designed to avoid granting worker or employment rights. However, in this case, evidence was put before the CAC by a rider who often gave his password details for his Deliveroo app to another person, to enable that person to provide the service on his behalf, and this was accepted as true by the CAC.

The riders appealed the decision by alleging they had rights to collective bargaining given by the European Convention on Human Rights. The judge did not accept that there was any human rights issue in the case and therefore, because the right of substitution was real, the individuals were not workers.

Like all recent employment status cases, this one turned on its facts. The key issue was Deliveroo’s ability to produce evidence from a rider who had actually used his contractual right to substitution. This demonstrated that the right was genuine and not a sham.

In the Pimlico Plumbers v Smith case, which was the subject of an appeal to the Supreme Court in February this year, the court agreed that an obligation to provide personal service was required. The fact that in some limited circumstances, substitution could be arranged, via Pimlico Plumbers, did not act to remove or dilute Mr Smith’s obligation to provide services personally and so he was a worker.

Similarly, in the recent Employment Appeal Tribunal judgment concerning Addison Lee drivers, the tribunal found that once individuals had logged onto the app through which they obtain their work, they were obliged to take on and perform personally the jobs offered to them. At this point, they became workers. 

Finally, the Court of Appeal has upheld the finding that Uber drivers are workers, but this time with one dissenting judgment, that judge considering that the legislation did not in fact go so far as to include those working for Uber.

Approach of the courts

The courts have been scathing about the use of artificial terms in contracts which are aimed solely at removing rights, and it is clear that the courts will look very closely at the reality of the operation of the contracts in practice. In the Uber judgment, the Court of Appeal refers to a “high degree of fiction” in the Uber driver contracts.

The message for those operating gig economy businesses is clear. If there is a genuine and often used right on the part of the person doing the work to substitute another person, the individuals will not be employees or workers for the purposes of employment legislation. If, however, the reality is that individuals are obliged to perform work themselves, the courts will grant employment rights by finding that the individuals are workers or employees.

The balance, therefore, is about the level of control the business needs or wishes to take over those delivering the service to customers. If businesses want to be able to ensure a service is provided only by named individuals who have undergone training, it is likely that such control comes at the cost of accepting worker status.

External regulation may limit business freedom. For example, private hire drivers must be licensed and it is not therefore possible for taxi services to allow drivers to send someone else to carry out a job. Subject to that, businesses have the choice of maintaining high levels of control at the cost of worker or employee status, or genuinely allowing delegation of tasks and avoiding such status.

Yvonne Gallagher is a partner at Harbottle and Lewis