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European court ruling may hinder Uber’s appeal against drivers’ employment status

21 Dec 2017 By Marianne Calnan

ECJ says ride-hailing app is a transport company for the purpose of employing drivers

The European Court of Justice (ECJ) ruled yesterday (20 December) that Uber is a transport company for the purpose of employing drivers, as opposed to the ‘information society service’ it had claimed – a decision that may make its appeal against a UK ruling that its drivers are workers less likely to succeed.

The case arose after Uber was told to obey local taxi rules in Barcelona, as other transport companies are required to. The ECJ ruling, which cannot be appealed, stated that firm “must be classified as a service in the field of transport within the meaning of EU law. Member states can therefore regulate the conditions for providing that service.”

The decision comes after Uber’s announcement that it would appeal the EAT ruling in its UK case, Aslam and Farrar v Uber, that its drivers are workers rather than being self-employed.

“The tide is now firmly against businesses sidestepping holiday pay, the national minimum wage, auto-enrolment and working time limits,” said Sarah Peacock, employment partner at Blake Morgan. “This could have an impact on the further appeals that Uber is lodging.”

Rachel Farr, a Taylor Wessing employment, pensions and mobility professional support lawyer, said the ECJ’s decision was “bound to make the forthcoming appeal harder for Uber by removing one possible argument it may choose to run”.

An Uber spokesperson said: “This ruling will not change things in most EU countries where we already operate under transportation law. As our new CEO [Dara Khosrowshahi] has said, it is appropriate to regulate services such as Uber and so we will continue the dialogue with cities across Europe.”

This judgment is the latest in a series of international cases regarding whether Uber should be classified as an employer. Until its appeal is heard against the EAT decision that its drivers are workers, Uber’s 40,000 UK drivers lack entitlement to the same employment rights as its full-time permanent staff.

The UK proceedings began at the end of October 2015 when four drivers submitted claims against the ride-hailing app, supported by the GMB union. These drivers claimed to be workers, and said Uber had failed to comply with its legal obligations to provide them with national minimum wage and holiday rights, and that a driver was dismissed for raising a complaint about the risk of drivers using false insurance documents.

The London Central Employment Tribunal heard the preliminary case in July 2016. The decision that drivers were employed as workers within the meaning of the Employment Rights Act, National Minimum Wage Act and the Working Time Regulations was handed down in October 2016.

Uber appealed this decision at the Employment Appeal Tribunal (EAT) this year. Here, the firm argued that it was primarily a technology company, with its app bringing self-employed drivers together, rather than an employer. The EAT upheld the employment tribunal’s ruling and dismissed Uber’s appeal.

The Advocate General’s opinion, published in May 2017, also found Uber to be more than a “mere intermediary” for customers hailing transport, and the company now has plans to appeal to the UK’s Supreme Court against the ruling that drivers should be classed as workers.

This longstanding legal battle could also have implications for other gig economy businesses by entitling workers to employment benefits such as the minimum wage, pensions and holiday pay. The government is also considering the proposals found in Good Work: The Taylor Review of Modern Working Practices that concern employment status.

These include dropping ‘worker’ status altogether for that of ‘dependent contractor’ in a bid to distinguish more clearly between those who are genuinely self-employed and those who are not, as well as a right for those who work on a zero-hours contract for 12 months or longer to request fixed hours from their employers that better reflect the hours they have actually been working.

Peacock said that although the review’s “heart was in the right place with good suggestions”, its future was in doubt. “Whether the political will and time exists to push these proposals forward in the UK remains to be seen,” she warned.

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