Following lengthy and highly publicised legal proceedings, the Supreme Court has handed down its judgment in the case of Uber BV and ors v Aslam and ors, unanimously reaching the same conclusion on employment status as the lower courts, i.e. Uber drivers are ‘workers’ providing personal services (not self-employed contractors). This means that Uber drivers are entitled to basic rights such as the national minimum wage, paid annual leave and whistleblowing protection.
What was Uber’s position?
Uber’s defence to the drivers’ claims that they were ‘workers’ centred on the argument that it is a technology platform which facilitates the provision of private hire vehicle services, but does not provide these services itself. Uber argued that the services were provided by drivers who operated as independent, self-employed contractors under a contract which was concluded between the driver and passenger for each journey, with Uber merely acting as a booking agent. Uber was unsuccessful in the employment tribunal, employment appeal tribunal and Court of Appeal before it made a final appeal to the Supreme Court.
What did the Court conclude?
The Supreme Court unanimously dismissed Uber’s appeal. It emphasised that the rights being claimed by the Uber drivers were not contractual rights, but were created by legislation. The Court found that it would be inconsistent with the purpose of the relevant legislation for it to start by looking at the written contract between the parties when deciding whether an individual falls within the definition of a ‘worker’. Instead, it should consider the purpose of the legislation, which (as identified in the earlier Supreme Court decision in Autoclenz Ltd v Belcher) is to give protection to vulnerable individuals who are in a subordinate and dependent position and to ensure they are not paid too little for the work they do, required to work excessive hours, or subjected to other forms of unfair treatment (such as being victimised for whistleblowing). The Court also noted that the legislation prevents employers from contracting out of statutory rights.
Applying these principles to the facts of the Uber case, the Court focused on five key points:
1) When a ride is booked through the Uber app, Uber fixes the fare and drivers are not permitted to charge more than the fare calculated by the app (so Uber dictates how much drivers are paid for the work they do). Uber also decides whether to make a full or partial refund where a passenger complains about the service provided by the driver.
2) Uber sets all the terms and conditions and drivers have no say in them.
3) Once a driver has logged onto the Uber app, Uber constrains the driver’s freedom about whether to accept requests for rides (for example, by monitoring each driver’s rate of acceptance (and cancellation) of trip requests and imposing what amounts to a penalty if too many trip requests are declined or cancelled).
4) Uber exercises significant control over how drivers deliver the services (for example, Uber vets the types of cars that drivers can use and applies a ratings system). If a driver’s Uber rating falls below a certain level, the driver will face penalties or termination of their contract.
5) Uber restricts communication between the passenger and driver to the minimum necessary to perform the particular trip and takes active steps to prevent drivers from establishing any relationship with a passenger outside the Uber app.
Based on these factors, the Court concluded that the Uber claimants were workers working for and under contracts with Uber. It noted that drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice, the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance.
The Court also concluded that each driver’s working time was not limited (as Uber argued) to periods when they were actually driving passengers to their destinations, but included any period when the driver was logged into the app within the territory in which the driver was authorised to operate and was ready and willing to accept trips. This time constituted ‘working time’ for the purpose of the Working Time Regulations and ‘unmeasured work’ for the purpose of the National Minimum Wage Act.
A transcript of the judgment is here: https://www.bailii.org/uk/cases/UKSC/2021/5.html
What does this mean for employers?
This landmark judgment significantly changes the landscape for gig-employers who must now accept the additional business costs of engaging workers, or rethink their business structures (if they need the individuals that work for them to remain genuinely self-employed).
There are also serious implications for employers more generally, as it is now clear that employment status will be judged on the practical reality of the relationship between the parties, not what any contractual documentation says. As workers’ rights are enshrined in legislation, it is not possible for businesses to contract out of the basic protections to which workers are entitled.
Many employers will want to review their arrangements with contractors to assess the employment status risk. This is at a time when there is a real spotlight on the employment status of individuals – not only from a rights perspective as above, but also in order to determine how they should be treated for tax and national insurance purposes, with changes to the IR35 regime coming in this April.
How we can help
Click here if you are interested in attending IR35 training. Make UK have also produced a suite of downloadable template documents providing the key documentation you need to formalise your relationships with contractors.
If you are a Make UK member, please click here to book your place on our Employment Law Update on 16 March 2021 and feel free to contact your adviser with any queries you wish to discuss. Alternatively, non-members are welcome to call us on 0808 168 5874, or email [email protected].