Uber drivers in London are workers, not independent contractors, according to a ruling on Thursday by the Court of Appeal.

While Uber argued that it is only an intermediary connecting drivers with riders, the Court of Appeal cited the “practical reality of the relationships” as favouring 'worker' status. The decision pointed out that although drivers have the right to turn down rides if the Uber app is on, Uber can disconnect them if they turn down offers too frequently. That left drivers under a “positive obligation” to be available for work while the app is on.

The Court of Appeal decision was not unanimous, Lord Justice Underhill dissented, arguing drivers should be treated as working only from when they accept a trip and that Uber’s arrangements with drivers did not essentially differ from those applied by taxi and minicab companies.

Drivers’ original claim says Uber owes holiday pay and underpaid wages; the case now goes back to the Employment Tribunal for a decision on those underlying claims.

“The important element of this decision is that the parties’ relationship must be determined by examining all the circumstances, of which the written agreement is only a part,” said Fiona Coombe, director, legal and regulatory research, at Staffing Industry Analysts.

“The court observed that ‘there is a high degree of fiction’ in the wording of the standard form agreement between Uber and the drivers, and that Uber exerted a high degree of control over the drivers by requiring drivers to accept and/or not to cancel trips,” Coombe said. “However, it is likely that Uber will take heart from the dissenting judgment of Lord Justice Underhill and will appeal this case to the Supreme Court.”

Andrew Chamberlain, deputy director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), said the ruling was only about two drivers in in particular circumstances, not on all self-employment.

“What this latest twist in the Uber saga does show, however, is just how complex this area is, and how much it takes to prove who is and isn’t self-employed,” Chamberlain said. “Self-employment is dynamic, always changing and very diverse. This case is only the latest example of how our creaking, outdated employment statuses simply aren’t keeping up.”