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Kenya Law / Blog / Case Summary: Uber drivers are not independent contractors but workers of Uber who are entitled to all accruing employment rights as the transportation service they perform and offer to passengers through the Uber app is very tightly defined and controlled by Uber.

Uber drivers are not independent contractors but workers of Uber who are entitled to all accruing employment rights as the transportation service they perform and offer to passengers through the Uber app is very tightly defined and controlled by Uber.

Uber BV and others v Aslam and others

[2021] UKSC 5

Supreme Court of the United Kingdom

Reed, P; Hodge, DP; Arden, Kitchin, Sales, Hamblen & Leggatt, SCJJ

February 19, 2021

Reported by Faith Wanjiku

Download the Decision

Employment Law – worker – definition of – where it was contended that Uber drivers were not workers under Uber but independent contractors performing services under contracts made with passengers through Uber as their booking agent – whether an Uber driver was a worker for the purposes of employment legislation, which gave workers rights to be paid the national minimum wage, to receive annual paid leave and legal protections for workers – what was considered, as working time, if the drivers were workers, for the purpose of the relevant employment rights to workers – Employment Rights Act, 1996, section 230(3); Working Time Regulations, 1998, section 2 (1).

Statutes – interpretation of statutory provisions – canons of statutory interpretation – intent of the relevant statutory provisions to a transaction – what was the modern approach to statutory interpretation in order to give purpose to a particular provision).

Statutes – interpretation of statutory provisions – section 230 (3) of the Employment Rights Act – definition of worker – whether an Uber driver was a worker for the purposes of employment legislation, which gave workers rights to be paid the national minimum wage, to receive annual paid leave and legal protections for workers - Employment Rights Act, 1996, section 230(3)

Contract law – authority – principal and agent – establishment of actual or ostensible authority through a contract – where rider terms merely stated that they constituted an agreement between the rider, the 1st appellant and the relevant local Uber company and neither purported to record an agreement to which any driver was a party – where Uber drivers had not received nor consented to the rider terms – whether there could be said to be a contract established through the rider terms to which Uber drivers were a party in order to give rise to a contract between a rider and a driver for the provision to the rider of transportation services by the driver.

Brief facts:

The appeal concerned the employment status of private hire vehicle drivers who provided their services through the Uber smartphone application (Uber app). The 1st appellant was a Dutch company which owned the technology behind the Uber app. Uber London Ltd (2nd appellant) was a UK subsidiary licensed to operate private hire vehicles in London. The respondents, at the relevant times were licensed to drive private hire vehicles in London and did so using the Uber app. Their claim was brought in the employment tribunal as a test case to establish their employment status. They claimed that they were workers under the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998. They thus also claimed that they were entitled to the minimum wage, paid leave and other legal protections.

The Employment Tribunal found that the claimants satisfied the test of being workers under section 230(3) of the Employment Rights Act, 1996 and worked under worker’s contracts for the 2nd appellant. The Employment Appeal Tribunal and the Court of Appeal (by a majority) dismissed the appellants’ appeals who argued that the respondents were independent, third party contractors and not workers hence the appeal to the Supreme Court.

Issues:

  1. Whether an Uber driver was a worker for the purposes of employment legislation, which gave workers rights to be paid the national minimum wage, to receive annual paid leave and legal protections for workers.
  2. What was considered as working time, if drivers were workers, for the purpose of the relevant employment rights to workers?
  3. What was the modern approach to statutory interpretation in order to give purpose to a particular provision?
  4. Whether there could be said to be a contract established through the rider terms to which Uber drivers were a party in order to give rise to a contract between a rider and a driver for the provision to the rider of transportation services by the driver.

Relevant provisions of the law

Employment Rights Act, 1996

Section 230(1) – employee

an individual who has entered into or works under a contract of employment

Section 230(2) -contract of employment

a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.

Section 230(3) – worker

“an individual who has entered into or works under (or, where the employment has ceased, worked under) -

(a) a contract of employment, or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;

and any reference to a worker’s contract shall be construed accordingly.”

Working Time Regulations, 1998

Section 2 (1) – working time

“working time”, in relation to a worker, means—

(a) any period during which he is working, at his employer’s disposal and carrying out his activity or duties,

National Minimum Wage Act 1998

Section 54 – Meaning of “worker”, “employee” etc.

(3) In this Act “worker” (except in the phrases “agency worker” and “home worker”)means an individual who has entered into or works under (or, where the employment has ceased, worked under)—(a)a contract of employment; or(b)any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual; and any reference to a worker’s contract shall be construed accordingly.

Held

  1. There was no written agreement between the 2nd appellant and drivers. In those circumstances the nature of their relationship had to be inferred from the parties’ conduct, considered in its relevant factual and legal context. It was an important feature of the context in which, as the Employment Tribunal found, the 2nd appellant recruited and communicated on a day to day basis with drivers that:

a)  It was unlawful for anyone in London to accept a private hire booking unless that person was the holder of a private hire vehicle operator’s licence for London; and
b)  the only natural or legal person involved in the acceptance of bookings and provision of private hire vehicles booked through the Uber app which held such a licence was the 2nd appellant. It was reasonable to assume, at least unless the contrary was demonstrated, that the parties intended to comply with the law in the way they dealt with each other.

  1. The rider terms on which Uber contracted with passengers included a term which stated that the 2nd appellant (or other local Uber company) accepted private hire bookings acting as disclosed agent for the transportation provider (as principal) and that such acceptance gave rise to a contract for the provision to [the rider] of transportation services between [the rider] and the transportation provider.
  2. Authority could be conferred by a contract between principal and agent. It could not be said, however, that the rider terms established a contract between drivers and the 2nd appellant. There was no evidence that drivers were ever sent the rider terms let alone consented to them. In any case the rider terms stated that they constituted an agreement between the rider, the 1st appellant and the relevant local Uber company: they did not purport to record an agreement to which any driver was a party. In accordance with basic principles of contract and agency law, therefore, nothing stated in the rider terms was capable of conferring authority on the 2nd appellant to act as agent for any driver (or other transportation provider) nor of giving rise to a contract between a rider and a driver for the provision to the rider of transportation services by the driver.
  3. The only written agreements to which drivers were parties were agreements with the 1st appellant, the Dutch parent company. No other Uber company was a party to those agreements. In any case, although clause 2.2 of the Services Agreement described what was to happen if a driver accepted a trip request either directly or through an Uber affiliate in the territory acting as agent, there was no provision which purported to confer the driver’s authority on any Uber affiliate to accept such requests on his behalf. An agency relationship needed not be contractual. What was required was an overt act by the principal conferring authority on the agent to act on the principal’s behalf.
  4. The task for the tribunals and the courts was not, unless the legislation required it, to identify whether, under the terms of their contracts, the claimants should be paid at least the national minimum wage or receive paid annual leave. It was to determine whether the claimants fell within the definition of a worker in the relevant statutory provisions so as to qualify for those rights irrespective of what had been contractually agreed. In short, the primary question was one of statutory interpretation, not contractual interpretation.
  5. The modern approach to statutory interpretation was to have regard to the purpose of a particular provision and to interpret its language, so far as possible, in the way which best gave effect to that purpose. The approach required the facts to be analysed in light of the statutory provision being applied so that if, for example, a fact was of no relevance to the application of the statute construed in light of its purpose, it could be disregarded. The ultimate question was whether the relevant statutory provisions, construed purposively, were intended to apply to the transaction, viewed realistically.
  6. It would be inconsistent with the purpose of the legislation to treat the terms of a written contract as the starting point in determining whether an individual fell within the definition of a worker. To do so would reinstate the mischief which the legislation was enacted to prevent. It was the very fact that an employer was often in a position to dictate such contract terms and that the individual performing the work had little or no ability to influence those terms that gave rise to the need for statutory protection in the first place. The efficacy of such protection would be seriously undermined if the putative employer could by the way in which the relationship was characterised in the written contract determine, even prima facie, whether or not the other party was to be classified as a worker. Laws such as the National Minimum Wage Act were manifestly enacted to protect those whom Parliament considered to be in need of protection and not just those who were designated by their employer as qualifying for it.
  7. In many cases it was not in dispute that the claimant was doing work or performing services personally for another person but there was an issue as to whether that person was to be classified as the claimant’s employer or as a client or customer of the claimant. The situation in the instant case was different in that there were three parties involved: Uber, drivers and passengers. But the focus had to be on the nature of the relationship between drivers and Uber. The principal relevance of the involvement of third parties (i.e. passengers) was the need to consider the relative degree of control exercised by Uber and drivers respectively over the service provided to them. A particularly important consideration was who determined the price charged to the passenger. It was necessary to consider who was responsible for defining and delivering the service provided to passengers. A further and related factor was the extent to which the arrangements with passengers afforded drivers the potential to market their own services and develop their own independent business.
  8. The remuneration paid to drivers for the work they did was fixed by Uber and the drivers had no say in it (other than by choosing when and how much to work). Unlike taxi fares, fares for private hire vehicles in London were not set by the regulator. However, for rides booked through the Uber app, it was Uber that set the fares and drivers were not permitted to charge more than the fare calculated by the Uber app. The notional freedom to charge a passenger less than the fare set by Uber was of no possible benefit to drivers, as any discount offered would come entirely out of the driver’s pocket and the delivery of the service was organised so as to prevent a driver from establishing a relationship with a passenger that might generate future custom for the driver personally. Uber also fixed the amount of its own service fee which it deducted from the fares paid to drivers. Uber’s control over remuneration further extended to the right to decide in its sole discretion whether to make a full or partial refund of the fare to a passenger in response to a complaint by the passenger about the service provided by the driver.
  9. The contractual terms on which drivers performed their services were dictated by Uber. Not only were drivers required to accept Uber’s standard form of written agreement but the terms on which they transported passengers were also imposed by Uber and drivers had no say in them.
  10. Although drivers had the freedom to choose when and where (within the area covered by their private hire vehicle (PHV) licence) to work, once a driver had logged onto the Uber app, a driver’s choice about whether to accept requests for rides was constrained by Uber. Unlike taxi drivers, PHV operators and drivers were not under any regulatory obligation to accept such requests. Uber itself retained an absolute discretion to accept or decline any request for a ride. Where a ride was offered to a driver through the Uber app, however, Uber exercised control over the acceptance of the request by the driver in two ways. One was by controlling the information provided to the driver. The fact that the driver, when informed of a request, was told the passenger’s average rating (from previous trips) allowed the driver to avoid low-rated passengers who could be problematic. The driver was not informed of the passenger’s destination until the passenger was picked up and therefore had no opportunity to decline a booking on the basis that the driver did not wish to travel to that particular destination.
  11. The second form of control was exercised by monitoring the driver’s rate of acceptance (and cancellation) of trip requests. A driver whose percentage rate of acceptances fell below a level set by Uber London (or whose cancellation rate exceeded a set level) received an escalating series of warning messages which, if performance did not improve, led to the driver being automatically logged off the Uber app and shut out from logging back on for ten minutes. That measure was described by Uber in an internal document quoted by the employment tribunal as a penalty, no doubt because it had a similar economic effect to docking pay from an employee by preventing the driver from earning during the period while he was logged out of the app. Uber argued that that practice was justified because refusals or cancellations of trip requests caused delay to passengers in finding a driver and led to customer dissatisfaction. The question, however, was not whether the system of control operated by Uber was in its commercial interests, but whether it placed drivers in a position of subordination to Uber which it plainly did.
  12. Uber exercised a significant degree of control over the way in which drivers delivered their services. The fact that drivers provided their own car meant that they had more control than would most employees over the physical equipment used to perform their work. Uber vetted the types of car that could be used. The technology which was integral to the service was wholly owned and controlled by Uber and was used as a means of exercising control over drivers. Thus, when a ride was accepted, the Uber app directed the driver to the pick-up location and from there to the passenger’s destination. Although it was not compulsory for a driver to follow the route indicated by the Uber app, customers could complain if a different route was chosen and the driver bore the financial risk of any deviation from the route indicated by the app which the passenger had not approved.
  13. A further potent method of control was the use of the ratings system whereby passengers were asked to rate the driver after each trip and the failure of a driver to maintain a specified average rating would result in warnings and ultimately in termination of the driver’s relationship with Uber. It was of course commonplace for digital platforms to invite customers to rate products or services. Typically, however, such ratings were merely made available as information which could assist customers in choosing which product or service to buy. Under such a system the incentive for the supplier of the product or service to gain high ratings was simply the ordinary commercial incentive of satisfying customers in the hope of attracting future business. The way in which Uber made use of customer ratings was materially different. The ratings were not disclosed to passengers to inform their choice of driver: passengers were not offered a choice of driver with, for example, a higher price charged for the services of a driver who was more highly rated. Rather, the ratings were used by Uber purely as an internal tool for managing performance and as a basis for making termination decisions where customer feedback showed that drivers were not meeting the performance levels set by Uber. That was a classic form of subordination that was characteristic of employment relationships.
  14. Uber restricted communication between passenger and driver to the minimum necessary to perform the particular trip and took active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride. When booking a ride, a passenger was not offered a choice among different drivers and their request was simply directed to the nearest driver available. Once a request was accepted, communication between driver and passenger was restricted to information relating to the ride and was channeled through the Uber app in a way that prevented either from learning the other’s contact details. Likewise, collection of fares, payment of drivers and handling of complaints were all managed by Uber in a way that was designed to avoid any direct interaction between passenger and driver.
  15. The transportation service performed by drivers and offered to passengers through the Uber app was very tightly defined and controlled by Uber. It was designed and organised in such a way as to provide a standardised service to passengers in which drivers were perceived as substantially interchangeable and from which Uber, rather than individual drivers, obtained the benefit of customer loyalty and goodwill. From the drivers’ point of view, the same factors, in particular, the inability to offer a distinctive service or to set their own prices and Uber’s control over all aspects of their interaction with passengers meant that they had little or no ability to improve their economic position through professional or entrepreneurial skill. In practice the only way in which they could increase their earnings was by working longer hours while constantly meeting Uber’s measures of performance. The claimant drivers were workers who worked for Uber London under worker’s contracts within the meaning of the statutory definition.
  16. The employment tribunal found that a driver was working under such a contract during any period when he:

a)  Had the Uber app switched on;
b)  was within the territory in which he was authorised to use the app; and
c)  was ready and willing to accept trips.

The Employment Tribunal was entitled to conclude that, by logging onto the Uber app in London, a claimant driver came within the definition of a worker by entering into a contract with Uber London whereby he undertook to perform driving services for Uber London. The third condition identified by the tribunal that the driver was in fact ready and willing to accept trips could not properly be regarded as essential to the existence of a worker’s contract; nor indeed did the tribunal assert that it was. But it was reasonable to treat it, as the tribunal did, as a further condition which had to be satisfied in order to find that a driver was working under such a contract.

  1. If the reality was that Uber’s market share in London was such that its drivers were, in practical terms, unable to hold themselves out as available to any other PHV operator, then, as a matter of fact, when they had the Uber app switched on they were working at the 2nd appellant’s disposal as part of the pool of drivers it required to be available within the territory at any one time. If, however, it was genuinely the case that drivers were able to also hold themselves out as at the disposal of other PHV operators when waiting for a trip, the same analysis would not apply.
  2. No evidence was adduced at the hearing in the employment tribunal in 2016 that there was at that time any other app-based PHV transportation service operating in London or that drivers logged into the Uber app were as a matter of practical reality also able to hold themselves out as at the disposal of other PHV operators when waiting for a trip. No finding was made by the Employment Tribunal on that subject. Time spent by the claimants working for Uber was not limited to periods when they were actually driving passengers to their destinations, but included any period when the driver was logged into the Uber app within the territory in which the driver was licensed to operate and was ready and willing to accept trips. That therefore constituted working time for the purpose of the Working Time Regulations 1998.

Appeal dismissed.

Relevance to Kenya’s legal system

The employment sector in Kenya is legally controlled by the Constitution of Kenya, 2010 particularly article 41 on labour relations’ rights which provides in sub-article (2) that every worker has the right to fair remuneration, reasonable working conditions, to form, join or participate in the activities and programmes of a trade union and to go on strike; and the Employment Act, No. 11 of 2007.

The Employment Act in section 3 states that it applies to all employees employed by any employer under a contract of service. Section 2 provides that an employee means a person employed for wages or a salary and includes an apprentice and indentured learner; and a contract of service means an agreement, whether oral or in writing, and whether expressed or implied, to employ or to serve as an employee for a period of time, and includes a contract of apprenticeship and indentured learnership.

Part IV of the Employment Act provides that an employer shall pay the entire amount of the wages earned by or payable to an employee in respect of work done by the employee in pursuance of a contract of service directly. Part V also provides for other various rights and duties in an employment relationship. The rights employees working under a contract of service are entitled to include annual leave, sick leave, housing, medical attention, notice of termination, all which constitute basic minimum conditions of employment. Further to that, an employer regulates the working hours of each employee.

The Kenyan judicial system has dealt with a lot of employment cases and those relevant to the circumstances of the UK case include:

In Christine Adot Lopeyio v Wycliffe Mwathi Pere [2013] eKLR, the court defined a contract of service as one where an employee was subordinate or under the guidance and dependence on another for their employment. The court went ahead to give several tests for distinguishing a contract of employment and one a contract for service which include:

a)  The control test whereby a servant was a person who was subject to the command of the master as to the manner in which he or she did their work.

b)  The integration test in which the worker was subjected to the rules and procedures of the employer rather than personal command. The employee was part of the business and his or her work was primarily part of the business.

c)  The test of economic or business reality which took into account whether the worker was in business on his or her own account, as an entrepreneur, or worked for another person, the employer, who took the ultimate risk of loss or chance of profit.

d)  Mutuality of obligation in which the parties made commitments to maintain the employment relationship over a period of time. A contract of service entailed service in return for wages, mutual promises for future performance. The arrangement created a sense of stability between the parties. The challenge was that where there was absence of mutual promises for stable future performance, the worker thereby ceased to be classified as an employee as would have been the case for casual workers.

The court further found under the particulars of the case that the practice between the claimant and respondent was one of a tenant collecting rent for and on behalf of the landlord as an ‘agent’ and which was rife and acknowledged. It was a contract for an occasional service, for which the tenant was compensated by free accommodation and payment of a commission. The tenant was neither subjected to any particular rules and procedures of the landlord, nor was there economic dependence upon the landlord as the service was only part of the tenant’s economic activities. That did not confer the same definition as outlined under section 2 of the Employment Act or the Employment and labour Relations Court Act, as an employment or contract of service, but stood out as a contract for a service and so the claimant did not fit into the definition of an employee.

In Linus Simiyu Wamalwa v Bridge International Academies [2018] eKLR, the court found the claimant to be employed under a contract of service and not as an independent contractor under a contract for services in that it was admitted by the respondent that the claimant was being paid Kshs.500 wage for every day he worked. It was also obvious that the employer exercised control over the working of the claimant through supervision and repeated instructions. It was also clear that the claimant’s time to report and leave work was fixed by the respondent who also provided the tools of trade (computers) and office space. It was also clear that the claimant was restricted to work from the employers premises only under the watch of a supervisor. Finally, it was clear that issuance of staff card, the claimant was regarded as part of the respondent’s establishment.

In Charles Mutua Mwanzi v Invesco Assurance Company Limited [2016] eKLR, the court found that even where the claimant may have been sourced and remained at the service of the respondent for the court to infer an employment relationship, and despite the very well-choreographed evidence to lead to that fact, the claimant lifted his own cover when he admitted to having been at the service of other employers, was allocated work similar to work he did for the respondent for other law firms. The claimant served such employees for service of summons and other court related matters.

The claimant became removed from the exclusive subordinate direction of the respondent. His employment therefore was not of the nature of a contract of service, rather a contract for a service as directed. Given the circumstances prevailing between the parties, they did not confer employment for the claimant to earn the entitlements set out. There was no employment relationship between the parties.

There is also the case of Kanuri Limited & 34 others v Uber Kenya Limited [2017] eKLR, where the court in trying to find out whether the plaintiffs’ allegations of violations of fraud, scheme of secrecy and conspiracy and abuse of dominant position and restrictive trade practices by the defendant and its principals held that it would be too early to take out the name of Uber Kenya Ltd without a further interrogation as to the exact and nature of relationship it had with Uber B.V and, further, its role in Kenya in the implementation of the contract entered between Uber B.V and the plaintiffs. It would be haste to dismiss the plaintiff’s claim against Uber Kenya Limited without further scrutiny as to whether Uber Kenya bore separate civil culpability (from Uber B.V) in the manner in which the contract had been implemented in Kenya.

When it comes to interpretation of statutory provisions, the court has held for example in Adrian Kamotho Njenga v Kenya School of Law [2017] eKLR, that in interpreting statutes, it was also a requirement that the court looked at both the text and context in order to ascertain the true legislative intent. The court had to as much as possible bear in mind the golden rule principle when interpreting statutes. The purpose of a statute played a pivotal role in determining the context, scope and the intended effect of the legislation. While applying contextual or purposive reading of a statute, it was important that the court remained faithful to the actual wording of the statute.

In Council of County Governors v Attorney General & another [2017] eKLR, the court while interpreting a statute had a key function of creating certainty in law. Certainty in law enabled planning of human affairs in reliance on the law, and the realisation of expectations based on such planning. It made for uniformity in the administration of justice, and prevented the unbridled discretion of the judiciary. It made available the tested legal experience of the past.

In Mugambi Imanyara & another v Attorney General & 5 others [2017] eKLR, it was held that in interpreting the law, the court ought to consider changing and adapting the law to new and unforeseen conditions. Laws had to change because change of social institutions. In applying generalised legal doctrine, such as statutes, to the facts of specific cases uncertainties and unforeseen problems arose. As conditions changed with the passage of time, some established legal solutions become outmoded. The courts should resolve those uncertainties and assist in adapting the law to new conditions. While interpreting the law, the Court was to bear in mind that it was to make laws when necessary to make the ends of justice. Legal systems world over could not grow as had been the case without a great amount of judicial law making in all fields, Constitutional law, Common Law and statutory interpretation. However, to the extent that judges made laws, they were to do so with wisdom and understanding. Judges were to be informed on the factual data necessary to good policy making. That included not only the facts peculiar to the controversy between the litigants before them, but also enough of an understanding of how the society works so that they could gauge the effect of the various alternative legal solutions available in deciding a case.

The UK case therefore reflects the Kenyan legal system in relation to how a contract of service between litigants is deciphered by the courts and how the courts also interpret statutory provisions in the way which best gives effect to their purpose. Further to these, Uber operates in Kenya and has its shared number of drivers under Uber Kenya who will then forthwith use this judgment as a precedent in proving that they are not working as independent contractors but as employees of Uber under their implied conduct in their employment relationship who are thus entitled to all the employment rights that accrue therein.

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