APP EMPLOYMENT ISSUES IN THE GIG ECONOMY
The (legal) press has, in recent months, reported on claims concerning the employment status of those working in the gig economy. This section of the labour market is characterised by the exchange of work for money via digital platforms that facilitate matching between providers and customers. In short, people are using apps to sell their labour to customers.
How does this model fit with the current legislative framework? Broadly, the UK’s employment law regime is based on a tripartite system whereby an individual is classified either as an employee, as a worker or as self-employed. Varying degrees of protection apply to each status. Employees attract the full range of employment protections whilst those who are self-employed have little protections. Workers sit between the two and are offered some protections. They have the right to be paid the National Minimum Wage, to receive paid holiday leave and to benefit from certain other protections in respect of, for instance, discrimination or unauthorised deductions from pay.
The courts are often asked to determine employment status. There has been a run of high-level cases in respect of the gig economy, where the traditional legal boundaries are faced with a new dynamic way of working. 2021 has seen two judgments on this point from the appellate courts – the Supreme Court’s decision in Uber in February and the Court of Appeal’s decision in Deliveroo in June. Interestingly, the courts reached different conclusions in each case.
On 19 February 2021, the Supreme Court confirmed that Uber drivers were workers and were not self-employed. Uber had submitted that the drivers were self-employed on the basis that a contract for transportation services is made directly between an individual driver and passenger when the latter books a ride through the app. The driver is, in turn, Uber’s customer. The passenger’s fare is calculated by the app and paid to Uber, which deducts a portion as a ‘service fee’ for use of the app and allocates the balance to the self-employed driver. Uber sought to rely on the terms of the written agreement between Uber and its drivers to support this position.
The Supreme Court did not agree. Its view was that Uber directly contracts with the passengers and then engages drivers to carry out the bookings. In R (on the application of United Trade Action Group Ltd) v Transport for London  EWHC 3290 (Admin) the Administrative Court confirmed that a passenger’s booking imposes a contractual obligation on the operator of a private hire vehicle service rather than the individual driver. This was the intention of the Private Hire Vehicles (London) Act 1998. It incentivises operators to use reliable drivers and provides passengers with a worthwhile remedy if something goes wrong.
The Supreme Court’s judgment in Uber sets out some fundamental principles when considering employment status. Firstly, the starting point when determining whether an individual is a ‘worker’ is not a written agreement (a shift from previous case law). Employment status is not a matter of pure contract law. The purpose of the relevant legislation is to protect individuals who are subordinate and dependent on an organisation. It follows that the true agreement between them must be gleaned from all the circumstances and not just a written agreement. Existing case law indicates that the greater the degree of control exercised by an organisation over the individual, the more likely they are to be a worker rather than self-employed. On the facts of the particular case, Uber “very tightly defined and controlled” the drivers’ work, including for instance, through their remuneration, the rating system, the terms on which they transported passengers and their trip acceptance rate. It was not particularly relevant that the written documentation did not reflect this reality. On the facts, the drivers were sufficiently controlled by Uber such that they should be classified as workers.
The Court of Appeal reached a different conclusion in respect of Deliveroo riders on 24 June 2021, confirming that they were not workers but were self-employed. Although the appellate proceedings were not directly concerned with their employment status (but rather their right to assemble in a trade union) the Court of Appeal observed that Deliveroo riders have a legal and genuine right of substitution. An individual rider is not under an obligation to provide the services personally. The court restated the principle that the obligation of personal service is an indispensable feature of the relationship between an employer and a worker. It followed that Deliveroo riders were not workers.
Whilst the courts in Uber and Deliveroo reached different outcomes, the underlying reasoning is consistent. Both courts have simply applied the existing law on employment status to the particular facts. In Uber,the company’s degree of control over its drivers was key. In Deliveroo, the determinative point was that riders have a genuine and legal right of substitution.
On this view, it might even be said that these decisions are somewhat conventional. However, taken together, they tell us that the courts are willing to thoroughly investigate the specific working relationship in app employment cases. The individual facts are fundamental. 2021 has not provided us with a clear maxim on the employment status of all gig economy workers who provide sell their labour through apps. There is no ‘one size fits all’.
Moreover, the courts are not shy to go behind written agreements in order to determine the true nature of these relationships. Owners of apps will not be able to avoid giving employment protections to those who should properly be classified as workers by literally ‘papering’ over them.
Against this background, and particularly in the wake of the drivers’ success in Uber, we will likely see more litigation on app employment status in 2022. The potential for compensation is significant, particularly given the size of some of these apps and the sheer numbers of people providing services through them. Indeed, drivers hired indirectly by Amazon are currently bringing such a claim, arguing that they should have worker status. This is clearly a space to watch over the coming months.
There is a separate and open question whether the Government will clarify the law on employment status by way of statute, as recommended by the Taylor Review back in 2017. This might reduce litigation. However, this seems improbable given that the Government last consulted on the point in 2018 and has not subsequently indicated any intention to do so.
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