Legal Articles Trade and Commerce Transportation Law


You missed the Introduction? Read it here

It is important that we remember where we are coming from. The treatise began with an introduction where we intimated you, our dear passengers with the details as to the routing, cost and take-away of this trip. Passengers and driver were all fired up for a sizzling beginning and a grandstand finish. Now, we begin. Here we go!

UBER seems to be a household name already. But the fact alone that certain quarters of our dear country may mistake its verbal articulation as meaning “Uba”1 makes it compelling to give snippet information on this global phenomenon called UBER.

UBER is a virtual transportation service platform that effectively connects transporters such as taxi cab drivers to needy customers who become passengers. This virtual platform exists in over 68 countries of the world and is globally managed as the UBER Group.

UBER was founded in 2009 in the United States of America. Its popular smartphone application which is its namesake was activated in 2010. Travis Kalanick, UBER’s Chief Executive in 2016 famously stated:
“UBER began life as a black car service for 100 friends in San Francisco – every one’s private driver… we’ve gone from a luxury , to an affordable luxury, to an everyday transportation option for millions of people.”2

This case may be properly cited as follows:
1. UBER B.V. – A Dutch corporation and parent company of the other two Respondents, it holds the legal right to the UBER smartphone application.
All three (3) as appellants, against (versus)

The Respondents as claimants in the court of first instance, the Employment Tribunal (equivalent to the National Industrial Court in Nigeria) instituted a suit claiming entitlement to the National Minimum Wage and other employment benefits as employees. This came apparently as a laughing stock to UBER as its terms and conditions are very clear and unambiguous. Every Taxi Driver that is unboarded or accepted into the UBER car driver catalogue was deemed by contract as an independent contractor.
The Employment Tribunal unanimously held that Mr. Aslam and Mr. Farrar were “workers” within the definition in Section 230(3)(b) of the Employment Rights Act, 1996 and were ipso facto, to the minimum wage and holiday pay. The Tribunal did not however specify whether the claimants were also employees but held them as ‘workers’. The below gives further details on the central conclusion of the ET:
“We accept that the drivers (in the UK at least) are under no obligation to switch on the App. There is no prohibition against ‘dormant’ drivers. We further accept that, while the App is switched off, there can be no question of any contractual obligation to provide driving services. The App is the only medium through which drivers can have access to UBER driving work. There is no overarching ‘umbrella’ contract. All of this is self-evident and Mr Linden did not argue to the contrary.
But when the App is switched on, the legal analysis is, we think, different. We have reached the conclusion that any driver who (a) has the App switched on, (b) is within the territory in which he is authorised to work, and (c) is able and willing to accept assignments, is, for so long as those conditions are satisfied, working for UBER under a ‘worker’ contract and a contract within each of the extended definitions.”

In view of the conclusion that UBER was the employer, the conflict of laws issue became irrelevant,3 but for the avoidance of doubt the ET held that, on Rome I Regulations,4 English law would have been applicable in any event.
The Tribunal highlighted the following reasons for arriving at its decision:
An organization resorting in its documentation to fictions, twisted language and even brand new terminology, merited a degree of skepticism
There were many things said and written in the name if UBER in unguarded moments, which reinforce the Claimant’s simple case that the organization runs a transportation business and employs the drivers to that end.

It is unreal to deny that UBER is in business as a supplier of transportation services
UBER’s general case and the written terms on which they rely do not correspond with the practical reality.

The logic of UBER’s case became all the more difficult as it was developed
It was not real to regard UBER as working “for” the drivers and that the only sensible interpretation is that the relationship was the other way round
The drivers fell full square within the terms of the 1996 Act (afore-cited)
The guidance in the principal authorities favoured the conclusion
The authorities relied upon by UBER’s counsel did not support the conclusion for which he argued.
The terms on which UBER rely do not correspond with the reality of the relationship between the organization and the drivers. Accordingly, the Tribunal is free to disregard them.

None of the above reasoning should be taken as doubting that the Respondents could have devised a business model which does not involve employing drivers. The Tribunal found only that the model which they chose, failed to achieve that aim.
The matter moved to the Employment Appeal Tribunal. The appeal was instituted on the following grounds, inter alia:
The trial Court erred in law in disregarding the tenor of the contractual documentations (the Terms and Conditions)
The trial Court further erred in law by relying on regulatory requirements as the basis of the existence of a Contract of Employment
On November 10, 2017, the Appeal Tribunal dismissed the appeal. In her reserved judgment, Judge Eady, QC (sitting alone) stated:
“I am satisfied that the Employment Tribunal did not err either in its approach or in its conclusions when rejecting the contention that the contract was between driver and passenger and that (UBER) was simply the agent in this relationship, providing its services as such to the drivers. Having rejected that characterization of the relevant relationships, on its findings as to the factual reality of the situation, the Employment Tribunal was entitled to conclude there was a contract between UBER and the drivers whereby the drivers personally undertook work for UBER as part of its business of providing transportation services to passengers in the London Area.”

The learned Appeal Tribunal Judge in quashing the second ground of appeal (as afore-cited) relied on the authority of Autoclenz Limited v. Belcher5 and it was important for the trial Tribunal to have due regard to the reality of the contractual obligations and of the factual situation. According to the learned Judge, the incipience must necessarily be the statutory framework rather than the label used by parties; the fact that the parties have termed the contract between them as a Contract for Service does not mean it cannot be otherwise in reality.
Furthermore, the words of the learned Judge sustained their relevance as follows:
“…I disagree. The ET was not bound by the label used by the parties; in the same way as the first instance tribunals in the VAT context, the ET was concerned to discover the true nature of the relationships involved. Its findings led it to conclude that the reality of the relationship between ULL and UBER drivers was not one of agent and principal; specifically, it rejected the argument that the drivers were the principals in separate contracts with passengers as and when they agreed to take a trip. It rejected that case because it found the drivers were integrated into the UBER business of providing transportation services, marketed as such (paragraphs 87 to 89), and because it found the arrangements inconsistent with the drivers acting as separate businesses on their own account, given that they were excluded from establishing a business relationship with passengers (drivers could neither obtain passengers’ contact details nor provide their own), worked on the understanding that UBER would indemnify them for bad debts and were subjected to various controls by ULL …. Having found that UBER drivers did not operate businesses on their own account and, as such, enter into contracts with passengers, the ET was entitled to reject the label of agency and the characterisation of the relationship in the written documentation.”

The aftermath of this Appeal Tribunal ruling saw UBER file a subsequent application to Judge Easy. This application was an attempt to leapfrog the judicial hierarchical structure and proceed on appeal straight to the Supreme Court. This attempt was sternly disapproved.6 UBER then filed its appeal at the Court of Appeal.

The appeal at this stage was heard in October, 2018. In a 2-1 decision on December 7, 2018, the Employment Appeal Tribunal Decision was upheld by the Court of Appeal. Certain salient observations are highlighted in the foregoing lines:
In distinguishing between a ‘worker’ and an ‘independent contractor’, the case of Cotswold Developments Construction Limited v. Williams7 speaks volume thus:
“…a focus upon whether the purported worker actively markets his services as an independent person to the world in general (a person who will thus have a client or customer) on the one hand, or whether he is recruited by the principal to work for that principal as an integral part of the principal’s operations, will in most cases demonstrate on which side of the line a given person falls.”

The above dictum obviously supports the holdings of the two Tribunals below. UBER Drivers do not market their services (at least directly as an independent person) but only get noticed by client through the controlled and regulated auspice of UBER.

In Autoclenz Limited v. Belcher,8 the following words were nailed:
“The concern to which tribunals must be alive is that armies of lawyers will simply place substitution clauses, or clauses denying any obligation to accept or provide work in employment contracts, as a matter of form, even where such terms do not begin to reflect the real relationship….

In other words, if the reality of the situation is that no one seriously expects that a worker will seek to provide a substitute, or refuse the work offered, the fact that the contract expressly provides for these unrealistic possibilities will not alter the true nature of the relationship. But if these clauses genuinely reflect what might realistically be expected to occur, the fact that the rights conferred have not in fact been exercised will not render the right meaningless.

Tribunals should take a sensible and robust view of these matters in order to prevent form undermining substance…”9

Furthermore, counsel to the Appellants argued that the holding in the Autoclenz case10 should not be used to disregard the effect of the Rider Terms11 since the Rider Terms do not constitute a contract of employment but rather, a contract between the Passenger and the Driver. The Court of Appeal disregarded this argument and reemphasized its power to disregard any contract or terms created by the employer in so far as it seeks to characterize the relationship between the employer and the individuals who provide it with services (whether employees or workers) in a particular artificial way.
Until the next episode comes your way, stay riveted.

Olukolade O. Ehinmosan
Lead Partner/Editor-in-Chief, LAW AXIS 360°

1. A name given to a child in the South-Eastern part of Nigeria
2. (At paragraphs 85-86) of the Employment Tribunal Judgment
3. Recall that the Defendants argued that Dutch Law was the applicable Law
4. Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June, 2008 on the law applicable to contractual obligations
5. (2011) UKSC 41; (2011) ICR 1157
6. Judge Eady refused a certificate under Section 37ZA of the Employment Tribunals Act, 1996
7. (2006) UKEAT 0457; (2006) IRLR 181, per Langstaff J
8. (Supra)
9. Per Lord Clarke of Stone-cum-Ebony JSC, para. 17-20
10. Supra
11. A portion of the UBER Terms and Conditions

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