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Uber and above?

14 March 16

Taking a ride with Uber? It’s not clear who may be liable in the event of a personal injury claim, but upcoming developments in employment law could provide a pointer

by Stephanie Barratt, John Morgan

Platform capitalism, connecting potential customers to a service or product by digital means, is becoming a defining feature of the global shareconomy. Airbnb claims not to be a hotel service but a platform that pairs hosts with guests; Amazon is not just a shop but matches sellers with potential buyers. Most recently, Uber stated that it is not a private taxi company but a platform to connect drivers and riders.

Such business structures allow companies, guising as platforms, to become increasingly abstracted from the services they provide and the people who provide them. Their treatment by the law and regulators is, like economics, trying to catch up. Uber is a prime example.

Uber Technologies Inc launched in San Francisco in 2009 and has reached 204 cities in 45 countries, arriving in Glasgow and Edinburgh in late 2015. The company reported staggering Scottish demand: a month before Uber’s launch in Edinburgh, over 65,000 locals had downloaded the app in anticipation.

What is Uber?

For those who haven’t used it, Uber is an app that lets a smartphone user, in a few taps of a screen, hail a private hire car. The platform connects “riders” to registered drivers – “partners”, in Uber parlance – using a GPS system. This provides an instant and often cheaper alternative to more traditional taxi services. Users often cite Uber’s convenience as setting it apart from other transport providers: the app shows where and who the driver is, when they will arrive, and the fare is paid online from a debit or credit card linked to the user’s account.

For drivers, there appear to be advantages of being free to choose which fares to accept and reject. They can work flexible hours by simply turning on the app. They maintain their own vehicles, pay the running costs and are free to work for other organisations. It is this flexibility which Uber suggests is behind its rapid rise. Yet Uber retains an element of quality control by setting the fare, requiring drivers to follow particular routes, and using a rating system to measure performance.

Uber as a “platform for service”

Where personal injury results from a traditional taxi driver’s negligence, the situation is relatively straightforward. If the driver is an employee of a taxi firm, that organisation may be liable vicariously. If the driver is self-employed, they will be liable. However, as has been seen elsewhere in the new shareconomy, the role of the “platform” is a developing one legally – is it employer, service provider, or simply an app on a phone? Who, therefore, to sue in a personal injury claim?

In its terms and conditions, Uber explicitly states that it “will not be liable to you in respect of any acts or omissions of its employees, agents or subcontractors”. Uber justifies this position by contending that, unlike some local taxi businesses, Uber does not own the drivers’ vehicles: the app is merely a device for “connecting private contractors with customers” in exchange for a cut of the fare.

This means that Uber drivers incur the same liability to passengers and third parties as any other road user, whether acting in the course of employment or not. Uber requires that all drivers have third party insurance from a “reputable provider”. Some insurance companies have capitalised on this and designed products tailored to Uber drivers, while others extend the traditional private hire or black Hackney taxi insurance to Uber drivers.

Like all road users, that does not mean that all Uber drivers are insured or that their insurance covers all eventualities. Last year the Guardian claimed that a prospective London Uber driver could easily upload fake insurance papers which could be approved by Uber’s system. This publicity put pressure on Uber to address what would happen if a driver was involved in a road accident and was uninsured. It responded by introducing “backstop” insurance to cover situations where no recourse can be taken against a driver’s insurance. Yet there seems to be a gaping hole in this policy, advertised on Uber’s website as “end to end” insurance. It covers from the time a customer is picked up until they are dropped off. However, this does not extend to the situation where a driver is on the clock but is between fares, or to liability to third parties such as pedestrians or other road users.

A rickety platform?

Uber’s challenge to the traditional economic models has left legislators and courts in places as disparate as California, Germany and London trying to catch up. Globally there is a status quo that many see as unsatisfactory: drivers bear potential liabilities and the ensuing cost of insurance, while being unable to take advantage of rights traditionally granted to employees.

Yet there are signs Uber’s platform status may have unsteady foundations. Four Uber drivers, supported by the GMB union, have brought a case to the London employment tribunal, arguing that they should be granted employee or worker status. Should the drivers prove successful in asserting either status, they would gain rights which cut to the very core of the platform’s rejection of liabilities for rights such as holiday pay and maternity leave.

It may also prove crucial in determining whether Uber is vicariously liable for negligent actions or omissions of its drivers. The inability of Uber drivers to rely on vicarious liability flows from their current status as independent contractors. The orthodox view, to which admittedly there are many caveats, is that employees attract vicarious liability while independent contractors do not. If the drivers are successful in asserting employee status, Uber would find it hard to argue that it does not attract liability for those drivers’ actions related to that employment.

Determination of employee status requires assessment of the facts. There are many factors inherent in the Uber model which point to independent contractor status: freedom to choose which fares to accept, no set required hours, obligation to maintain their own vehicles and pay running costs, and no requirement to work exclusively for Uber. Conversely, the drivers suggest that Uber’s control over and initial receipt of the price, requirement to follow particular routes and use of performance ratings are all akin to the control commonly exerted over employees. While the trite proclamation is often that you “know employment when you see it”, the tribunal will assess this range of factors and more.

What, though, if the drivers fail to assert employee status? Is there a route for Uber to attract vicarious liability if their drivers are found to be the lesser statutory creature of “workers”, or even self-employed? The law in this area is more nebulous. One view, flowing from Catholic Child Welfare Society v Various Claimants [2012] UKSC 56 and JGE v Trustees of Portsmouth Roman Catholic Diocesan Trust [2012] EWCA Civ 938, is that vicarious liability can be established where there is a relationship “sufficiently similar to employment”. The courts have assessed the element of control, whether the individual performs a core function, the level of integration into the organisation, and whether they were more like an independent contractor. Given the right set of circumstances, a court may be persuaded to find that an Uber driver falls on the “sufficiently similar” side of that test.

Legal APPlication

Should the drivers bringing the tribunal case be successful and establish employee or worker status, Uber’s vicarious liability for acts and omissions will not immediately follow. Litigation on that point would be required, most likely in the context of a reparation action. Given the importance of independent contractor status for Uber’s platform model and for individuals within the shareconomy, it is likely that the employment tribunal’s determination would be appealed in any event. With recent reports suggesting that nearly five  million Britons now derive some kind of income from the sharing economy, this is an area in which some guidance by courts on employee rights and liability would be appreciated, and quickly.

Stephanie Barratt and John Morgan (Pictured) are trainees at Brodies LLP, working under partner David Armstrong 

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