This post forms the second part of our series on Uber and UTAG v TfL.
The High Court has determined that Uber and Free Now’s business model, of acting as an agent for its drivers is unlawful. Their model must be updated to be in accordance with the Private Hire Vehicles (London) Act 1998.
Uber and Transopco (trading as Free Now) must contract directly with passengers who book. This will affect all private hire operators in England and Wales, with very limited exceptions.
The High Court has confirmed Lord Leggat’s obiter in Uber v Aslam  UKSC 5, and has given both drivers and passengers more protection when using private hire apps.
Alexi Norris, Assistant Editor, interviewed leading employment and equality law barrister Jason Galbraith-Marten QC of Cloisters who acted for the App Drivers and Couriers Union in this case. The ADCU was one of the two successful Respondents to Uber’s Part 8 Claim for declaratory relief.
Question 1: For those who are not familiar with the case, can you break down the facts and legal arguments?
Jason Galbraith-Marten QC: The decision of the High Court earlier this month links to the decision of the Supreme Court (in Uber v Aslam) given earlier this year, in the Supreme Court case, as most people will know, the Court found that Uber drivers were employed by Uber as workers. In so doing they rejected Uber’s argument that Uber was merely acting as the agent of the drivers, putting drivers in contact with passengers, so that passengers contract directly with drivers. The Supreme Court rejected that argument on the facts in the first Uber case.
Lord Leggatt, giving the judgment of the Court, expressed the view, albeit obiter, that Uber’s argument that it was acting only as the agent of drivers was not compatible with the licensing regime for London, which is contained in the Private Hire (Vehicles) Act 1998 and regulations.
He didn’t finally decide that point, he left it open but expressed the view that it wouldn’t be possible for Uber, under the legislation, to contract as agent. Instead, it was required to contract directly as principal. That was the issue decided most recently in the High Court.
In the light of Lord Leggatt’s comments, TfL issued guidance to all private hire vehicle operators in London, pointing out to them that Lord Leggatt had made this comment, and reminding operators that it was their responsibility to comply with the law, and on the back of that, both Uber and Free Now went to court (in separate cases which were heard consecutively) seeking a declaration that the 1998 Act did not, in fact, require operators to contract as principal with passengers. So, in effect they were saying that Lord Leggatt’s observation was wrong, and under the legislation they were allowed to contract as agent, rather than as principal.
It’s really interesting because in many respects it was a collateral attack on the decision of the Supreme Court. They lost in the Supreme Court but, on the facts as they existed at the time of the Employment Tribunal decision in 2016. What they were really seeking to do here was say ‘we lost on those facts, but if we change the facts, then we should be allowed to contract as agent’. One of the main facts that counted against them in the Supreme Court was that there was no document clearly appointing Uber to act as agent of the drivers. That could be easily fixed – Uber simply have to issue new contracts and require their drivers to sign those contracts if they want to work on the Uber platform. They could have ‘fixed the facts’, which is why this recent decision is so important. Uber were asking the court to declare that they could contract as agent, and that would surely have been the first step – presumably – to issuing new contracts, and then effectively saying ‘the decision of the Supreme Court no longer applies, and we don’t employ you’.
Question 2: Did the case further expand on the Supreme Court’s Uber v Aslam judgment?
Yes, it absolutely does, it closes the door to Uber changing the facts to avoid or circumvent the decision of the Supreme Court. It now makes it impossible for them to say that they can contract as the agent of the drivers. It doesn’t necessarily follow from that, that the drivers are employed by Uber (or any other platform company), but in my view, it makes it inevitable that any driver working for a private hire vehicle operator in London now, must be employed by that operator. Moreover it doesn’t just apply in London as there is similar legislation in the rest of England and Wales, which is contained in the 1976 Law Reform (Miscellaneous Provisions) Act, almost to identical effect.
The upshot of this High Court decision is that those working as private hire drivers across the country will necessarily be employed by the operator that they provide their services to.
Question 3: Did you find any of your submissions particularly challenging to plead?
Not so much to plead, but I was instructed by the App Drivers and Couriers Union, which was set up by James Farrar and Yaseen Aslam, who were my clients in the Supreme Court. This case was a licensing case – it was about the proper construction of the 1998 Act but I am an employment lawyer. So, you could ask ‘why were we there at all?’
One of the more interesting arguments we ran was that the purpose of the 1998 Act is to enhance passenger safety. Prior to the introduction of the 1998 Act, what was then called the mini-cab trade was unregulated in London, and there were all sorts of problems with unregulated drivers picking up passengers late at night etc. So, that posed a risk to public safety. If the main purpose of the legislation was to enhance passenger safety, we wanted to argue that a consequence of Uber being able to contract as agent not as principal was that drivers were not employed by Uber, and if they weren’t employed by Uber, they wouldn’t benefit from statutory employment protection – national minimum wage, pensions, paid holiday for example.
So, we said, if the Court was to find against us, it was very likely to mean that drivers would not get those statutory employment protections. They would be much more likely to work longer hours, and indirectly this would put passenger safety/road safety at risk. We heard stories of drivers having to work 60, 70, 80, 90 hours a week, just to make a living.
If they’re doing that and not taking adequate rest, they’re potentially putting themselves and others at risk. So, we argued the point from an ‘employment’ perspective in front of non-employment judges in the High Court, and there was a degree of scepticism about the argument. They listened but unfortunately did not refer to the argument expressly in their decision (although Lord Justice Males does comment on one of my submissions about drivers not turning up and thereby endangering a passenger for example it might be a woman on her own at night). So indirectly they referred to it, but they didn’t engage specifically with the employment point. So that was challenging.
The other interesting point in this case was that there had been very few cases on this legislation, and the few cases that the other side managed to find, did on the face of it suggest that the court ought not to be applying a contractual analysis when deciding the proper construction of the 1998 Act. We were arguing that the legislation required Uber to contract as principal with passengers. The other side said this legislation had nothing to do with contract, as it was about the licensing of operators and their drivers, which is wholly independent of the law of contract:whether you are licensed as an operator has nothing to do with passengers who have contractual rights with relation to any journey. There are a couple of cases which superficially seemed to support that, including, ironically, one I had appeared in some years ago and lost.
In that sense it was tricky knowing that there were cases which appeared to support the submissions our opponents were making, and to have to find a way to distinguish those cases. Under the 1976 Act there is a specific section which deems the contract of hire to be made between the operator and passenger. So, we argued, and the Court accepted this, that those cases, though they appear to suggest the Act had nothing to do with the law of contract, had to be seen in the context of a provision in that statute which expressly provided for there to be a contract. Therefore, properly understood, those cases did not support the argument that the regulatory regime and the law of contract were independent of each other.
Question 4: Do you think this judgment will contribute to the existing influx of claims against Uber, regarding workers’ rights and status such as national minimum wage, holiday pay, or is this a matter strictly relating to licensing?
Well in fact, this is potentially, of greater significance. The decision of the Supreme Court established that drivers are workers for the purposes of statutory employment protection, but unless a particular driver seeks to enforce their rights through the employment tribunal, it is very easy for the employer (in this case Uber) to ignore the decision. For example, the Supreme Court decides that drivers are entitled to national minimum wage, periods of rest and periods of holiday, well if Uber don’t pay that, unless someone brings that to the Employment Tribunal, no one would ever know.
Given that Uber employs thousands of drivers in London, unless they chose themselves to start paying holiday pay etc. most drivers won’t either (a) realise they have got those rights or (b) be willing to bring claims in the Employment Tribunal. So, the Supreme Court sets the precedent, but it is easy to ignore that precedent. This most recent decision is a decision about the proper construction of the legislation, that Transport for London are bound to enforce. So TfL now have an obligation to ensure that Uber’s contractual arrangements comply with the 1998 Act. You have a statutory regulator making sure Uber complies. That’s not something they can ignore.
So, in many ways, this decision may have greater consequences for Uber than the Supreme Court decision. In other words, it is no longer dependent on individual drivers to enforce their rights; TfL should be doing that job for them.
Question 5: Do you think this case will hamper the luxury of flexibility, and the low-cost model, of the ‘gig economy’?
No, this is a common misunderstanding. I remember when the Employment Tribunal Uber case came out back in 2016, a couple of drivers being interviewed and commenting that they didn’t want to be employed by Uber because they valued the flexibility that being self-employed gave them. They liked the idea that they weren’t obliged to work any set hours, for example. This was a complete misunderstanding of the effect of the Employment Tribunal decision and the effect of the legislation.
The drivers wanted to establish not that they were ‘employees’, in the strict sense, but that they were ‘workers’, which is a middle category. It falls between employment in the true sense, the narrow sense, where you pay tax under the PAYE system and the truly self-employed. Workers sit somewhere in between. They have some of the rights of employees but not all the rights – they do not get the right to complain about unfair dismissal for example. But they are still self-employed for tax purposes. Therefore the mere fact that you are a worker doesn’t mean that you lose the flexibility.
So, it’s a halfway house – the advantage of being a worker is you keep the flexibility of being self-employed, the disadvantage is that you are unable to claim unfair dismissal for example. But the decision of the Employment Tribunal did not deprive drivers of the flexibility they value. It simply ensured that when they are in fact working, they are entitled to be paid the minimum wage, and they are entitled to be paid on a pro-rata basis if they take holiday for example.
So, it is a common misconception that the impact of the Uber decision is that drivers and their employers lose flexibility because the drivers are held to be workers. And that’s not specific to Uber and the driving trade; it is true of any specific situation where an individual is held to be a worker and not an employee.
Question 6: So how will this case impact licensing applications with TfL? Do you think many licenses will be quashed following this decision, and TfL will have to change their policies, including reviewing contractual terms of the operator?
Yes – absolutely. TfL now know that the legislation requires operators to enter direct contractual relationships with their passengers whereby the operator is the principal in that contractual relationship. In other words, they are no longer allowed to say that they are only agents for the drivers.
The court didn’t quash the license that was granted to Free Now, but they said this interpretation of the legislation had to be considered by TfL, so TfL will now have to review the licenses it has granted to all operators in London, and to tell them they are no longer able to contract on the basis that they are the agent of drivers. How they go about it, in terms of the timescale, they haven’t yet announced, and that will have to be watched very carefully, but there is no doubt that they will have to ensure that the operators comply with the law, and any operator which chooses not to do so is at risk of losing its license.
Question 7: Do you think this case will have the ability to impact all gig economy businesses, or is it only limited to private hire models?
This is the second Uber case, the High Court case is specific to the private hire industry because it is about the construction of the 1998 Act, so that case doesn’t have any impact on the gig economy more generally. Having said that, all these cases which are looking at the status of gig economy workers, each one which goes in favour of the individuals, that is not only the employment status cases themselves but also these related cases, I think they mark a trend in the way the courts are viewing gig economy workers.
They are increasingly looking to protect gig economy workers, whether it is under legislation specific to employment law, or whether it is under other legislation such as the Private Hire Vehicles Act, but the Courts are more minded to find an interpretation that is protective of the individuals. So, it is not specifically concerned with the gig economy, but it is very much of a piece with the other cases we have seen looking at the gig economy model.
Question 8: Following the ‘Uber’ judgment, is there an achievable business model for a private hire company to operate solely as an agent and not a principal? Do you think there’s any wiggle room?
No – not in relation to that contractual arrangement. So, the legislation now requires that operators contract as principal, not as agent for the drivers. There are some small businesses where the operator is also the licensed driver, so it is possible for an individual to be the operator and licensed driver and therefore, the fact that they are required to contract directly with passengers – means it is still the same person, it is the driver contracting with the passenger. You wouldn’t say that is ‘wiggle room’ as such, that is a specific factual situation that applies if you’re an operator/driver – it certainly won’t have an impact if you’re a larger operator, the Ubers and Free Nows of this world. They won’t have the option to be licensed as both – so I don’t think there is any wiggle room there.
Question 9: Do you think this case will be litigated further or is Uber fully reconciled with this decision?
So that’s an interesting question. I think I mentioned two cases were joined together – Transopco is the company which runs Free Now, the rival to Uber, as an app based private hire company. The Uber case was a specific case, a Part 8 case seeking a declaration on the proper construction of the Act. The Transopco case was a case where a body representing black cab drivers sought judicial review of a decision by TfL to grant a licence to Free Now. They ran the same argument as in the Uber case, but also ran an argument on what it means to ‘ply for hire’. That is a rather odd phrase – the ability of a cab to drive along with its light on and stop whenever you stick your arm out. Black cabs are allowed to ply for hire, but minicabs are not allowed to ply for hire.
So, Transopco lost that point – on whether an app which shows you a car driving around the street, with a little map, and you can say ‘yes I want one to come immediately’ is plying for hire. However The Court granted permission to appeal to the CoA on that point however neither Free Now nor Uber sought to appeal on the construction point, which would indicate they have accepted the decision of the Court and they are not intending to appeal further. You are not obliged to apply for permission to the lower court, so it is possible they could petition the Court of Appeal for permission directly, but certainly the fact they didn’t ask the lower court suggests they are not going to.