High Court rules Uber model must change which may prompt review into ALL 1,800 TfL minicab operators
In a landmark ruling, the High Court Administrative Court has refused Uber’s application declaring its controversial gig-economy business model must change.
Uber, despite the Supreme Court worker rights ruling, sought a declaration from the High Court that it is lawful for Uber’s drivers to continue to contract directly with Uber’s passengers for transport services. Uber had argued that its role was confined merely to that of an internet booking agent and that it was not party to any contract for the provision of transport.
Lord Justice Males and Mr Justice Fraser handed down this ruling and also the result of a Judicial Review against transport regulators Transport for London (TfL) in response to their decision to give FreeNow a PHV Operator licence.
The Judicial Review against FreeNow was challenged in two parts; the Operator point and Facilitating PHV to Ply for Hire via an App. The United Trade Action Group (UTAG) was successful on the Operator ground only.
The App Drivers and Couriers Union (ADCU) say the misclassification has been used to shield operators from employer liability, legal liability to their customers and for payment of VAT.
The ruling will fundamentally restructure the private hire industry in London as almost all 1,832 TfL licensed operators have used this model of operation since the industry first came under regulatory supervision in 2002.
The case arose after the Supreme Court in the worker rights ruling earlier this year expressed an unbinding opinion it could be unlawful for Uber to operate its business model in this way under transport law as regulated in London TfL. The High Court has now clarified the matter by declaring that operators like Uber who accept bookings are “required by the 1998 Act to enter (as principal) into a contractual obligation with the passenger to provide the journey in respect of that booking”.
The ruling could be seen as a huge embarrassment for TfL and the Mayor of London. Representatives have called for the Mayor to conduct an urgent review into TfL to root out what went wrong.
Yaseen Aslam, ADCU President and claimant in Aslam v Uber, said: “For years, the Mayor and Transport for London told us they had no powers to protect TfL licensed drivers from brutal exploitation by licensed operators like Uber. This ruling confirms that, not only had the powers all along but, in fact, they had the duty to act on these powers but failed to do so. The Mayor of London must now order an urgent review of TfL to find out what went wrong, to bring the industry rapidly into compliance and to ensure passengers and drivers are never again put at risk like this.”
James Farrar, ADCU General Secretary and claimant in Aslam v Uber, said: “This was a failed collateral attack on the Supreme Court ruling by Uber who sought to break any link between its obligation to obey employment law and its license to operate in London. Rather than fix its broken business model, Uber was determined to double down on misclassification at the cost of worker rights, passenger safety and the avoidance of VAT. Because TfL declared neutrality before the court, the ADCU had no choice but to step in and use our own meagre resources to defend this case. Our victory will now make misclassification unlawful, transform the London minicab industry for the better and finally eradicate sector wide worker rights abuses.”
The court concluded: “In order to operate lawfully, an operator must undertake a contractual obligation to passengers, and as both Uber and Free Now acknowledge that they do not at present do so, they will need to amend the basis on which they provide their services. Both companies have indicated that they will do so if that is what the court concludes.
“It follows also that TfL will need to reconsider its current practice which is that it does not review the contractual terms of an operator when considering a licence application. Since an operator which does not undertake the required contractual obligation is not operating lawfully, TfL will need to consider how best to ensure that the basis on which Uber, Free Now and perhaps other similar operators conduct their operations is in accordance with the requirements of the 1998 Act.
“We do not consider, however, that it is necessary or appropriate to quash the decision to grant a licence to Free Now. Free Now has made clear that it will, if necessary, amend its terms to comply with the outcome of these proceedings and has acknowledged that, if it were to fail to do so, that would provide grounds for TfL to take action. In these circumstances to quash the licence would be disproportionate, as well as having a potentially very significant impact on drivers using the Free Now app, who have no reason currently to believe that they are engaged in any unlawful activity, and a great many of whom make their livelihoods in this way.
“We have not been directly concerned in these proceedings with whether it is open to an operator who accepts a contractual obligation to a passenger to carry out a booking to exclude in effect all liability to the passenger in the way which Free Now's Users' Terms current at the date of the licence appear to do. That too, however, is a matter which TfL will need to consider. At first sight it appears hard to reconcile with the purpose of the legislation as we have described it.”
Graham Robinson, General Manager of TfL Taxi and Private Hire said via a notice to the industry: “All London PHV operators will need to carefully consider the High Court’s judgment and take steps to ensure that they comply with it, including considering whether any changes to their way of working are required.
“Transport for London will be considering the written terms of those applying for or renewing a licence and looking at operators’ terms during the period of the licence.”
More to follow…
