Hi lovely readers. It’s been quite a while between the Episode one of our UBER trip and this moment. I remember we went past a number of beautiful locations in moderate speed. Hope you haven’t forgotten these locations. Why would you forget now? Well, let’s take a glance at the past.
We introduced the trip by giving a compass of our desired route and the various key locations to meet along the way including a summary of the case up to the Court of Appeal Judgment stage, the dissenting opinion of a siting judge, the dissent of this writer on that dissenting judicial opinion, et cetera.
We moved on to Episode one by giving a summary of what transpired at the various rungs of the judicial hierarchy up to the Court of Appeal. We then opted for a much needed stopover.
Now, we continue our trip into the penultimate episode by looking critically at the dissenting judgment. Shall we? YES.
WHAT ARE THE ENGLISH COURTS REALLY SAYING?
To some, the consecutive decisions of the three rungs below the Supreme Court, in the English Labour judicial hierarchy still remains baffling and surprising. To some, the imminent decision of the Supreme Court will allay the fears of key players in the gig economy. To me, before reaching the present sub-heading, I still had a chronic misunderstanding – What extent of control would an employer/Taxi or Cab operator wield over the Driver to guarantee a Contract of Employment/Service? When does a taxi/cab operator/Driver relationship become a Contract for Service in law? The lines of brief legal reasoning that follow should help.
In Mingeley v. Pennock & Ors. (Trading as Amber Cars),1 the Claimant owned his motor vehicle and paid the Respondents (minicab operators) £75 weekly for a radio and access to their company system, which allocated calls from customers to a fleet of drivers. He was required to wear a uniform and prohibited from working for any other operator, but was not required to work, nor accept any fare allocated to him by the system. All the fare money was his to keep. The Court of Appeal, in its unreserved judgment held:
“… Mr. Mingeley’s only contractual obligation to Amber Cars was to pay the £75 weekly fee for access to Amber Cars’ computer system. He does nothing else contractually for Amber Cars and therefore, on the plain meaning of the words, his contract with them cannot be a contract personally to execute any work or labour.”
Furthermore, the Employment Tribunal in the instant case also considered the case of Addison Lee Limited v. Lange2 moderately germane. The claimants were drivers working for Addison Lee’s PHV business. Almost invariably, they used a vehicle hired from Eventech Limited, an associated company of the respondents (in contrast to the owner-drivers in the present case). The vehicles were in Addison Lee livery. Each driver was given a hand held computer known as an XDA. When ready to work the driver would use the XDA to log on to the respondent’s computer system which could locate the XDA and the vehicle. Allocation of jobs was automatic. When a job was notified to the driver he had to accept it forthwith or give an acceptable reason for not doing so. If the controller deemed the reason to be unacceptable, the matter was referred to a supervisor and a sanction might follow.
Despite the Terms and Conditions of the Appellant reiterating that each contracted driver is an “independent contractor” almost like a deafening echo, the Court went behind the veil of the terms and conditions. It held that the level of control wielded by the Appellant on drivers coupled with the economic reality of the relation between the parties pointed to the spot – Contract of Service.
The Court of Appeal was constituted by three (3) Justices. The judgment was a majority one in the ratio 2:1. The “1” represents the dissenting judgment of Lord Justice Underhill. What is the persuasion behind the dissenting judgment of His Lordship?
His Lordship begins in a characteristic manner thus:
“I have the misfortune to disagree with the Master of Rolls and Bean LJ about the outcome of the appeal in this case…”
For brevity and clarity, it is important to lay bare, the judicial observations and submissions of His Lordship
1. His Lordship picks the finding of fact as to quality control measures employed by UBER towards its unboarded drivers and submits that this control is not inconsistent with and does not overrule the existence of a contract between the passenger and the driver, with UBER being the agent. “Even if UBER acts only as an intermediary, it plainly has an interest in maintaining the quality of the product from which it makes its profits.
2. The fact that UBER conducts recruitment for drivers before they are unboarded did not dispel His Lordship’s submissions that there was indeed a contract between the drivers and the passengers.
3. His Lordship observed that the passenger and driver not knowing each other’s names is not inconsistent with the existence of a contract between them: that is the case not only whenever a passenger flags a taxi in the street but also whenever he or she books a minicab operating on the model described above where the driver is the principal. (In fact the passenger at least is not entirely in the dark, since UBER supplies the driver’s first name, and he or she will be able to ascertain his identity if necessary because he will have to display his private hire licence.) As for the driver not knowing the destination in advance, this is the case whether he contracts with the passenger or with UBER, and “I do not see how it is relevant to that question. But I do not in any event see what the supposed absurdity consists in: the driver is in business to drive passengers where they want to go and it is not likely to be of importance to him (at least for any legitimate reason) to know the destination at the point of acceptance”
4. His Lordship submitted that the driver’s lack of control over key terms in the contract as represented in the Terms and Conditions does not dissociate the arrangement from being a contract between the driver and passenger. While noting the fact that UBER unilaterally draws up (and can unilaterally cancel) the terms and conditions, fixes the fare, determines the routing of a particular trip (failure of the driver to ply that route is at his own peril), His Lordship stated that this lack of control on the part of the driver has fast emerged as a common trend and practice in the gig economy. Thus, this relative novelty of this common trend should not be a clog on the reality of the contractual terms voluntarily entered into by drivers and passengers.
5. The fact UBER is empowered to unilaterally log off drivers (for 10 minutes) who, having switched the app on, have refused to accept trips, decline three (3) consecutive offers or too often cancel trips already accepted by such drivers was noted by His Lordship. However, in his submission, he stridently argued in the following words:
“I do not accept that. It is equally consistent with UBER’s case that its essential relationship with drivers is to license them the use of the App. It is consistent with that case that it should reserve the right to take steps which disincentivise drivers from being logged on when they are not in fact available (which can give would-be passengers a misleading idea of how many cars are in fact available nearby). That is not the same as a penalty for breach of a positive obligation owed to it or an affiliate.”
In sum, the judicial opinion of His Lordship can be reduced thus:
The effective ground upon which the Employment Tribunal gave its trial decision was that the drivers were under a contractual obligation with UBER to accept trips more regularly than not. If it is admitted that there is a contract between the drivers and UBER, then such contract must be taken to begin each time a driver accepts a trip from a potential passenger/customer (it is common ground that drivers are not obliged to accept any particular trip when offered). It has been well argued that the logging off of drivers from the UBER App for 10 minutes is not a penalty for the breach of an obligation but rather, a disincentive to drivers in order to maintain the reputation of UBER to passengers/customers. On this basis and the afore-stated common ground, the effective ground upon which the Tribunal gave its trial decision quickly collapses.
MY DEPARTURE FROM THE DISSENTING JUDGMENT
In what is appearing to be a harvest of dissentions, I have the singular misfortune to disagree with the rich dissenting judgment of His Lordship, Lord Justice Underhill. My reasons are inextricably linked to the majority judgment of the Court of Appeal albeit, with a different conclusion. Shall we?
The recent storm of globalization in the legal space has truly strapped on its back, new scenarios and contrivances by drafters of contract documents. Unprecedented business and investment models have zoomed in. Because the law is what it is – a night guard that just has to display “activity” on the arrival of strangers in the house – law making at all levels (including the courts) must be on red alert. Paper tigers and contract terms that are aimed at cleverly circumventing certain contractual implications are rife. No better time for the court to channel explosive high-octane power towards a mature management of the legal situation than this.
Unsurprisingly against this backdrop, the English Courts have been less moved by the fanciful wordings of Terms and Conditions. The Court takes a close focal view – and quite rightly too – at the substance of the transaction upon which the Terms and Conditions apply. The Courts keep asking in every case: “What is the (economic) reality of this transaction?”3
Scholars and students of Labour and Trade Dispute Law will always recall that the various tests that have been used over the years to determine the existence of a Contract of Service between parties – Control Test, Mutuality of Obligations Test, Economic Reality Test, and the list is actually inexhaustible.4 While it appears that the Economic Reality test is the recent judicial trend, we must not neglect the overarching significance of the two other tests highlighted above, especially the control test.5
Delving into economic reality, the various stages in the process of effectively honouring a passenger’s request for an UBER ride may be reduced
a. Passenger turns on the App and his location and inputs his destination and preferred pickup point.
b. The request by UBER for a ride is made to any or all UBER drivers within or proximate to the stated pickup point
c. The request by UBER is accepted by an available driver
d. driver picks up the passenger
e. Upon completion of trip, fare is calculated by UBER automatically.
The Court observed that the contractual stipulation in the Terms and Conditions that there is a contract between the driver and the passenger at the first to third stages above cannot be legally upright as vital elements of a binding contract are missing. The driver does not know a crucial fact at this point – the passenger’s destination. Only UBER is aware of this. Furthermore, the driver is oblivious of the fare for the trip he undertakes until it is completed; a fare determined by UBER and totally outside his power, authority or discretion.
In another related phase, the regulatory framework behind the Judgment is indispensable. Counsel to UBER brilliantly attempted to downplay the effect of the statute by emphasizing the Terms and Conditions as the determinant of the existence, scope and substance of the relevant transactions. As a matter of fact, laws were constantly considered in detecting the ideal legal position of parties in the instant case. For instance, it was the Private Hire Vehicle Act, 1998 that informed the Court’s finding that UBER is a Private Hire Vehicle company. The words that attach to this explanation must be reproduced plainly:
“ULL is the PHV operator for the purposes of the PHVA 1998 and the regulations made under it. It is ULL which has to satisfy the licensing authority for the purposes of section 3(3)(a) of the Act that it is a fit and proper person to hold a PHV licence. It is ULL which alone can accept bookings, and ULL which is required by the PHV Regulations to provide an estimate of the fare on request. For ULL to be stating to its statutory regulator that it is operating a private hire vehicle service in London, and is a fit and proper person to do so, while at the same time arguing in this litigation that it is merely an affiliate of a Dutch registered company which licenses tens of thousands of proprietors of small businesses to use its software, contributes to the air of contrivance and artificiality which pervades UBER’s case.”6
Similarly, the Court was captivated and immensely persuaded by the arguments of Linden QC on the deceptive and legally impossible nature of the UBER Terms and Conditions. Indeed, the terms made the drivers agree to be bound by obligations which either ordinarily does not concern them or that they were unaware of. This was evidently an escapist agenda. UBER felt an urgent need from the outset of the Private Hire Vehicle business to escape the legal implications of being the employer of the drivers under a contract of service.
In continuation of observations on the terms and conditions, the Court was bemused (and I follow suit) by the following key facts:
1. That UBER stipulated its position as the agent of UBER Drivers and then turned around to wield “sole and absolute discretion” to accept or decline bookings from customer passengers.
2. That UBER elicits and keeps a record of passenger details and other relevant data to the exclusion of so-called “independent contractor” drivers. UBER actually argued that this was necessary to protect passengers and guarantee their safety. However, it is respectfully submitted that this only further buttresses the conclusion that UBER runs a transportation company and employs drivers to help provide quality services while also guaranteeing optimal patronage from customers/passengers.
Heavily crucial in this UBER trip to determining economic reality, were statements released in the public domain on different occasions by representatives of UBER. Remarkably, the lead judgment at the Court of Appeal in the instant dispute had the following:
““Every single person that gets into an UBER knows that our responsibility to him doesn’t end when they get out of the car.”
Ms Bertram told us that UBER provides the drivers with “business opportunities“, but strenuously denied that they had jobs with the organisation. However, in a submission to the GLA Transport Scrutiny Committee ULL boasted of “providing job opportunities” to people who had not considered driving work and potentially generating “tens of thousands of jobs in the UK.”
On the subject of payment of drivers, we have referred above to the Partner Terms and New Terms, which provide for UBER to collect fares on behalf of drivers and deduct their ‘Commission’ or ‘Service Fee’. But in its written evidence dated 3 October 2014 to the GLA Transport Scrutiny Committee, Ms Bertram on behalf of ULL stated:
“UBER drivers are commission-based … Drivers are paid a commission of 80% for every journey they undertake.”
This statement neatly encapsulates the Claimants’ case that they are workers providing their services to ULL as employer. It is wholly at odds with UBER’s case. The ET records at the end of paragraph 69 that Ms Bertram attempted before them to dismiss it as a typographical error. The ET’s observation that this attempt was made by the witness “to our considerable surprise” is notably restrained.7
You cannot claim to be an agent and act like a principal. The law will certainly look behind the veil created by your agency clothing or disguise and look into your skin and realistic features. This is what has played in the instance dispute by the coupling of statutory and extant common law principles governing the principal-agency and employer-employee relationships.
Until the GRANDSTAND FINISH comes your way, stay riveted.
Olukolade O. Ehinmosan
Lead Partner/Editor-in-Chief, LAW AXIS 3600
1. (2004) EWCA Civ. 328; (2004) ICR 727
2. (2018) UKEAT 37
3. Brackets used for personal emphasis
4. Stringfellow Restaurants Limited v. Quashie (2012) EWCA Civ. 1735; (2013) IRLR 99
5. Carmichael v. National Power (1999) ICR 1226 at 1233B-C
6. Court of Appeal Draft Judgment, December 19, 2018 at 14:44, page 36
7. Court of Appeal Draft Judgment, December 19, 2018 at 14:44, page 39