What are the legal implications of TfL’s decision not to renew Uber's licence?

The outcome for drivers rests on a judgment on their employment status, which is expected before Christmas

The surprise announcement that Transport for London (TfL) would not be renewing Uber's operating licence when it expired at the end of September left thousands of Londoners worried about the loss of their low-price taxi rides. Uber immediately appealed to its customers to sign a petition, which currently has more than 850,000 signatures, to lobby TfL to reverse its decision. Uber has held talks with TfL and filed an appeal contesting the ban, allowing it to continue operating until the appeal has been decided. But what will it mean for the estimated 40,000 Uber drivers in London if the platform ceases to operate there?

The Uber drivers' rights will depend upon whether they are self-employed, workers or employees. Uber maintains that its drivers are self-employed, but in October 2016 the employment tribunal disagreed, declaring them to be ‘workers’. Uber's appeal against that decision was heard by the Employment Appeal Tribunal on 27 and 28 September 2017 and judgment is awaited.

If the EAT upholds the decision that the drivers are workers, they will be legally entitled to receive the national minimum wage (NMW), paid holidays and weekly/daily rest breaks – entitlements they would not have if self-employed. As workers, if Uber's London operation ceased, the drivers would be able to recover any arrears of pay (arising from underpayment of NMW) and pay for accrued but untaken holiday. If self-employed, the drivers would be limited to payments due and owing under their commercial contracts with Uber.

Sparse protection

Whether workers or self-employed, the protection for the drivers if Uber's licence is not renewed is sparse compared to protections they would receive as employees.

Comparisons can be drawn with the 1,858 employees of Monarch recently made redundant as a result of the company going into administration. As employees, as well as being entitled to arrears of pay/holiday pay, they have the right:

  • for employees with two years' plus service, to be paid a statutory redundancy payment calculated based on gross weekly salary (capped at £489 per week), age and length of service;

  • to be consulted before being made redundant both collectively via representatives (where the number of employees being made redundant is 20 or more) and (where the employee has at least two years' service) individually, with compensation if that consultation does not take place. Unite the Union, representing cabin crew and engineers, says this collective consultation did not happen and is taking legal action. Awards for a failure to collectively consult (protective awards) can be up to a maximum of 90 days' actual gross salary per employee; and

  • to be paid for their notice period, which must be at least one week for each complete year of service up to a maximum of 12 weeks.

If an employer refuses to pay or is insolvent, as in the case of Monarch, certain payments to employees can be met by the government out of the National Insurance Fund. These include statutory redundancy payments and, up to a certain limit, arrears of pay, protective awards, statutory notice pay, pension contributions and holiday pay.  

Workers and the self-employed are not entitled to any statutory redundancy pay, collective consultation or statutory notice pay.

The silver lining for Uber drivers is that firm's appeal against non-renewal of the licence will take at least a year, providing plenty of time for a solution to be sought between TfL and Uber.

Sara Thompson is a solicitor and Katherine Plunkett is a trainee solicitor, both in the employment law team at Blake Morgan