Assessing the impact of Uber in employment status cases

It's just over a year since the Supreme Court’s landmark decision that Uber drivers should be categorised as workers. We assess this ruling’s influence on subsequent litigation about employment status.

Uber principles apply across the board

Employment status is not just about employment rights. It can also determine how much tax an individual has to pay. In the immediate aftermath of the Uber ruling, it was not clear how far its radical approach to determining employment status should be applied in tax cases.

This question has now been answered – in rather a roundabout manner – in separate Court of Appeal rulings about the tax status of Kate Adams, a TV presenter, and Paul Hawksbee, a radio sports presenter. They had both been engaged by their relevant media companies via personal service companies. Under the relevant tax legislation, their employment status for tax purposes depended on determining what their contracts would have provided, had they been engaged directly. The Court of Appeal said that there was a single body of case law which dictated the approach the courts should take when ruling on employment status. This was regardless of whether they were dealing with tax cases (when they would be exploring the impact of a hypothetical contract) or determining an individual’s status for employment rights purposes (when they would be assessing an actual relationship).

It is difficult to follow all the twists and turns of these appeals. However, the Court of Appeal’s insistence on a single, unified test to define an employment relationship – however tricky to apply – should go some way to simplifying the legal arguments in future cases.

No requirement for “mutuality of obligation” for workers

The Court of Appeal has recently cleared up another area of confusion, this time involving the statutory definition of a worker for employment rights purposes.

Worker is defined slightly differently, depending on the legislation involved, but most definitions have three key ingredients. A legally binding contract is required, the individual must perform work personally under that contract, and the individual must not be providing this work as part of their own business. For many years there has some confusion over whether this legal definition implied some level of “mutuality of obligation” – i.e. a degree of commitment by the employer to provide work, in return for an agreement by the worker to accept at least some of the work offered.

In a case involving a member of a fitness to practice panel run by the Royal College of Nursing, the Court of Appeal has answered this question with a no. It has said that establishing worker status only involves satisfying the requirements of the statutory definition: no additional element is required. This is therefore another decision which should go some way to simplifying the law.

Some claims will still fail

Although the law has become more favourable to claimants since Uber, it does not of course follow that all claims for employee or worker status will succeed. It remains the case that all such claims will be decided on their own facts. Not even taxi drivers using apps will necessarily establish worker status, as one recent case involving a black cab driver using the Mytaxi app illustrates.

Other cases have provided examples of individuals who have not managed to secure either employee or worker status, despite providing their services personally. These include a groundsman (even though the cricket club against which the claim was brought was his biggest client) and a shareholder/director (despite receiving payment from the company for work he did for it).

However, the most striking illustration of the principle that each case is unique comes from another area of the gig economy. Almost a year ago, the Court of Appeal upheld a decision of the Central Arbitration Committee that Deliveroo delivery riders were not workers for union recognition purposes. Although the definition of worker is slightly different in trade union legislation, that does not account for the different outcome, when compared to Uber. What appears to have been crucial in Deliveroo was that the riders had a right of substitution, which the CAC regarded as genuine and workable, even though very few riders used it in practice.

More radical decisions from the employment tribunal can be expected

It is worth remembering that the question the Supreme Court had to answer in Uber was whether or not the employment tribunal had been legally entitled to conclude that Uber drivers were workers. It was not about whether its members would have made the same decision had they stood in the Tribunal’s shoes.

The significance of Uber therefore lies in the encouragement it has given to future tribunals to take a back-to-basics approach to employment rights, rather than getting tied up in the legal intricacies of the documentation the employer has put in place. A good illustration of this influence comes from the recent decision of the employment tribunal involving the status of agency pilots working for Ryanair.

In that case, Jason Lutz was seeking to establish he was a worker, in order to claim holiday pay and sick pay from a company that was involved in the provision of agency pilots to Ryanair. The employment tribunal was prepared to find that he had been engaged as a worker by the agency, even though he had no direct contractual relationship with it. Rather, he had been required to form a personal services company which then contracted with the agency, which in turn agreed to introduce this company to Ryanair.

If this ruling is upheld on appeal, it would be the first binding ruling on employment status prepared to ignore the existence of a corporate vehicle interposed between the claimant and the employer. That may mean revisiting the historic case law on agency workers, which currently makes it very difficult for agency workers to establish a direct employment relationship with the business to which they are deployed.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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