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Employment and Migration Blog

The ‘gig economy’: Are Uber drivers and Deliveroo riders contractors or employees?

Posted by Stephen Booth on 15 Dec 2016

A recent UK employment tribunal decision found that Uber’s drivers are not in fact contractors (as Uber’s documents and structure say) but are entitled to employment benefits such as the national living wage and paid leave, as they fell within the relevant definition of “worker.”

The tribunal rejected Uber’s arguments that is was merely a technology company, not a transport business, and that the drivers were independent contractors because they could choose where and when they worked. 

The drivers who took Uber to the tribunal gave evidence that they were pressured to work long hours and accept jobs, and that there were repercussions if they declined a job, and that for some periods their earnings were well below the national living wage (as little as £5 compared to the £7.20 minimum per hour). 

The tribunal said that Uber’s documents resorted to “fictions, twisted language and…brand new terminology” which “bears no relation to the real dealings and relationships between the parties,” should be read “sceptically,” “are designed to misrepresent the relationship” and that “The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous…Drivers do not and cannot negotiate with passengers…They are offered and accept trips strictly on Uber’s terms.”

The arguments of the parties, and the comments of the tribunal, are closely related to the arguments which arise under Australian law when the status of an arrangement as an employment or contractual relationship, or as a sham contract under the Fair Work Act, needs to be resolved. 

The case has a long way to go in the English courts, as Uber has stated it will appeal, and there are potentially three levels of appeal before the outcome is final. Nevertheless, the decision has prompted vigorous discussion of what this means for other business models in the “gig economy,” such as Deliveroo and Foodora. Deliveroo riders went on strike in London in August, raising similar issues about flexibility and freedom (Deliveroo’s view), compared to “exploitation and exhaustion” (the strikers’ view).

These issues are yet to be tested in Australia but one can imagine language similar to that of the UK tribunal being used in a sham contracting case or an employment/contract decision to attack gig economy structures, because it is a basic issue in such cases that it is the real nature of the relationship, rather than what the parties have called it, that is significant. This is especially so when there is an imbalance in power between the principal and the contractors who would otherwise be employees, and who receive conditions below those which would apply if they were employed.

This is an issue which has a long future and which may raise the prospect of government regulation, to deal with the issue more broadly as the gig economy spreads, or in suitable cases, action from the Fair Work Ombudsman. A future to be watched with interest, especially for any business engaging workers as contractors rather than as employees.

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