Uber, but for the employee/contractor distinction

There are many different ways to measure the ubiquitous success of Uber, but perhaps the most telling is the extent to which the expression “Uber, but for” has become a cliché for describing start-up ideas (“Uber, but for parsley? Sure, I’d love to invest in that!”) Some of these ideas appear to be a little on the niche side (Wired magazine included a story this month headlined “Uber, but for Millennials who want Orchestras in their Living Rooms”) and as for me, I’m just trying to pitch “Uber, but for time machines”, so I can go back in time and make all these “Uber, but for” pitches the first time around.

So if Uber is a byword for successful start-ups, what is the business that Uber has started up? You might think that a business which involves people paying money to be transported around in cars was a transport business, but not according to Uber. Uber says that it is a technology business, not a transport business. All around the world, Uber also says that the drivers are self-employed independent contractors, and that the technology (the Uber platform) provides leads to the drivers, and it is the drivers who then, in effect, contract directly with their passengers to provide the actual transport.

Whether this argument is correct in Australia is yet to be tested. However, if the result of a UK Employment Tribunal case decided last week is replicated in Australia, the company may find itself looking at something which is like Uber, but for colossal employment law headaches.

The UK Tribunal was asked to consider whether Uber drivers were “workers” for the purposes of the UK’s Employment Rights Act, National Minimum Wage Act, and Working Time Regulation. Uber denied that the drivers were “worker”s, but the Tribunal disagreed.

Part of the problem for Uber was the difference between the carefully prepared evidence of Uber’s Regional General Manager in the proceedings, and the somewhat less carefully prepared evidence of what actually happened in practice. For example, although the General Manager “chose her words with the utmost care” in her “grimly loyal” evidence, her evidence in the proceedings did not sit well with submissions she had made to a regulatory body which described Uber drivers as being “commission-based” (which would make them workers). Before the Tribunal, the General Manager sought to explain the regulatory submission as a “typographical error”, although exactly what it was that she was trying to type when she typed “commission-based” was not, apparently, explored.

Uber had other problems in trying to argue that its drivers were working for themselves, rather than for Uber. For example, the Tribunal noted that Uber holds itself out as offering a “product range”, and asked “whose product range is it, if it is not Uber’s?” Uber’s argument that it simply assisted drivers to grow their own businesses was simply not assisted by the fact that drivers could not really grow their businesses (other than by spending more hours behind the wheel) because the drivers could not solicit the custom of particular passengers and could not contract on any terms or conditions other than those set by Uber.

In expressing its scepticism about the contractual provisions on which Uber relied, the Tribunal cited an earlier case which referred to the need to guard against “armies of lawyers” inserting clauses into contracts “where such terms do not begin to reflect the real relationship”. Of course, Australian employment law has also grappled with work arrangements where what is documented bears little relationship to the reality of the work which is performed. In Australia, it is always important to bear in mind the memorable expression of Deputy President Gostencnik of the Fair Work Commission that:

“That which has webbed feet, waddles and quacks is likely to be a duck. Putting a saddle on it and calling it Phar Lap will not change that fact.”

The lesson for those who engage contractors in Australia (whether by the use of internet platforms, or through more traditional means) is that it is important to focus on the reality of the way that the work is being performed, and not to assume that cleverly-drafted contractual provisions will carry the day. Unless it successfully overturns the decision, Uber in the UK will now be facing claims for underpayment of hourly rates and overtime, and the failure to provide paid leave. Uber may have been a successful disruptor of the taxi business thus far, but if anyone has an idea for “Uber, but for calculating back pay liabilities”, I may have an idea about where you could give that a pitch.


November 20
Employment Law