Uber - Employee Rights and Regulatory Issues

Uber, the taxi app, is facing legal action in the UK over the treatment of its drivers.

The GMB union is bringing a case on the basis that Uber does not provide its drivers with basic workers’ rights such as minimum wage, paid holiday or rest breaks. Uber argue that its drivers are not entitled to these rights because they are “partners” so essentially independent contractors and not workers or employees.

Uber lost a similar case in June 2015, when a California court ruled that an Uber driver was an employee rather than an independent contractor under Californian employment laws, on the basis that the company did not merely facilitate a transaction between the customer and the driver but is “involved in every aspect of the operation”. The level of control that is exercised is also a key factor in the test for employment status under UK employment laws.

There is no single test to determine employment status in the UK and, somewhat confusingly, HMRC and the UK courts take different approaches. Essentially, the factors that the UK courts take into account to determine employment status include:

  • Mutual obligation – this means that the employer has an obligation to provide work and the employee has an obligation to be available for work;
  • Personal service – the service has to be provided by the individual, they cannot send a substitute;
  • Control – the employer controls what, how and when;
  • Exclusivity – the individual cannot work for anyone else without the employer’s express permission;
  • Facilities and equipment – the company provides the individual with the facilities and equipment required by them to carry out their job;
  • Benefits – they may receive a pension, bonus, private medical insurance, company car or other benefit, and be entitled to holiday pay and company sick pay;
  • Integration – the individual is integrated into the company. For example, their name appears on the internal telephone directory, they have a company e-mail address, they wear a uniform and they have a company business card.

The courts will not always accept the parties’ definition and will look behind written agreements to see what the reality of the relationship is.

In addition to the ‘employment’ issues being raised by the GMB union through the courts, there are other possible issues which could cause Uber to fall foul of their licensing or regulatory obligations in the UK as well.

Uber - employee rights and regulatory issues

The fact is Uber has tapped into our obsession with the use of electronic devices. Using an app to order a taxi now sits alongside ordering take away food, carrying out internet banking or buying our weekly shopping but who are you actually 'contracting' with when you book a taxi via the Uber app?

All taxi and private hire vehicle operators must obtain a licence from the local authority where they operate, meaning that they must satisfy a number of factors to be licensed, including vehicle maintenance and repute.

Uber manage the app, enabling customers to book a taxi and for the Uber controller to dispatch the job to one of the private license vehicle operators who have signed up with the company. The company is the downloaded app booking service but the drivers used are individual licence holders. Transport for London has stated that Uber are operating lawfully with this system. However, it has also been argued that the arrangement undermines the private hire vehicle licensing regimes because London taxi drivers pay for their licence in the district they work, whereas Uber drivers are not required to be licensed in that district, as long as they hold a PHV licence. The Licensed Private Hire Car Association described them as "cowboy cab apps masquerading as technology companies".

Difficulties may arise if a driver commits a criminal offence or licensing breach. Who does the enforcer investigate? Some offences, including driving without insurance through to manslaughter, can lead to both the driver and operator being prosecuted. This would apply, for instance, if a driver suffers from fatigue and has a serious accident. Who is controlling that driver, are they being regulated by the operator and if so, should the operator face prosecution if the driver is overworked? But an app can't be prosecuted... can it?

When dealing with regulatory breaches, it is important for enforcement agencies to investigate claims an employer / operator has forced a driver to exceed driver's hours or drive a poorly maintained vehicle. This provides a mechanism to regulate the industry, and ensure high standards are met and that health and safety measures are complied with.

It is unlikely that an app will ever be prosecuted. It is merely a download, not a controlling mind. Therefore, not only is there a direct impact on the drivers who seek redress for poor pay conditions, but also an impact on the wider public who deserve reassurance that the taxis and drivers they use are regulated and accountable.

For further advice on employment issues, please contact Maria Gallucci, or for advice on road transport offences or regulatory issues, please contact Mike Hayward or Tim Norris