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Jemille Gibson
Jemille Gibson,
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Uber Workers: Supreme Court Strikes at Uber’s Business Model
03 March 2021

Co-authored by Jemille Gibson and Barry Stanton

In the culmination of a saga beginning with an Employment Tribunal preliminary hearing held in July 2016, The Supreme Court on 19 February 2021 handed down its judgment in Uber BV v Aslam [2021] UKSC 5, confirming (like the Court of Appeal, Employment Appeal Tribunal and Employment Tribunal before it), that drivers for Uber have worker status, and they are not, as Uber had claimed, independent contractors.

Background

To use Uber’s services, a prospective customer downloads the Uber app and is able to request a ride. The app identifies a nearby driver who is then offered the ride. If they accept; they are connected with the passenger and can proceed to pick them up. The fare is set by Uber, who take a cut, with the remainder going to the driver.

The Claimants argued that the services they provided for Uber meant they had worker status, and therefore the right to benefits such as sick pay, holiday pay and the minimum wage.

Who is a Worker?

The “worker” serves as a kind of intermediate category in UK employment law, between an employee who obtains the maximum level of statutory rights, and an independent contractor, who in most situations can only rely on rights he negotiates for himself under a contract. The term worker is defined under section 230(3) of the Employment Rights Act 1996 (“ERA96”) as (with my emphasis):

…an individual who has entered into or works under (or, where the employment has ceased, worked under)—

(a) a contract of employment, or
(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;

The Issue

As it was not in dispute that Uber was not a client of the Claimants, and the Claimants had agreed to perform services personally, the main issue was the first part of the test at s230 (3)(b), i.e. whether the Claimants were working under a contract whereby they had undertaken to perform services for Uber.

Uber’s Defences

Uber argued that they were only acting as an agent for the drivers, a “matchmaker” between passengers and drivers. They argued that the three courts below were not entitled to disregard the terms of the contracts existing between itself and passengers, and itself and the Claimants.

One of the Court of Appeal judges, although in a minority, held that the contractual relations set out the reality of the situation and that it was not possible, therefore for the Tribunal to look outside of the contractual arrangements. 

Supreme Court Reasoning

Notwithstanding Uber’s contractual manoeuvres, the Supreme Court noted that the rights asserted by the Claimants derived from statute under ERA96, the National Minimum Wage Act 1998 and the Working Time Regulations 1998. Therefore, determining worker status was not a contractual exercise. It was instead one of statutory interpretation. 

Any other approach would: “…in effect … accord Uber power to determine for itself whether or not the legislation designed to protect workers will apply to its drivers.”   The Supreme Court also noted the purpose of the legislation, was “…to protect vulnerable workers from being paid too little for the work they do, required to work excessive hours or subjected to other forms of unfair treatment…”.

Although the drivers had a substantial degree of autonomy it was clear that Uber exercised a very high degree of control, setting fares, the terms the drivers worked under, their ability to accept or reject fares, the cars they used and their ability to communicate with passengers. In addition, Uber reserved the right to restrict or remove access to their platform on the basis of passenger ratings of the driver’s performance.

In aggregate, the above meant that Uber’s app was:

…designed and organised in such a way as to provide a standardised service to passengers in which drivers are perceived as substantially interchangeable and from which Uber, rather than individual drivers, obtains the benefit of customer loyalty and goodwill.

Drivers for their part had:

…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 Supreme Court consequently agreed that the drivers were workers, and were working at any time that they were logged in to the app, thereby being at Uber’s disposal and subject to Uber’s control.

Notable throughout the decision, is that Uber’s meticulously constructed contractual terms held next to no weight in the Supreme Court’s reasoning, the most important factors instead being what actually happened in practice.

Implications

Uber drivers are therefore workers, with rights to minimum wage, sick pay and holiday pay, among other rights. Uber’s initial attempts to try and limit the effect of the judgment only to the twelve 2016 claimants is unlikely to hold for long.

In reality, both Uber and similar gig economy operators relying on nominally independent couriers and food delivery drivers may need to brace for follow up actions by their workers.
 
It bears repeating that the courts will not allow operators to determine for themselves whether or not the relevant legislation will apply. They will readily go behind the contractual devices that may have been created to try and define the worker’s status if in practice; the workforce meets the statutory definition of a worker.

Whilst the gig economy presents substantial opportunities for novel contractual arrangements it is clear that Tribunals will be able to interpret the arrangements applying the tried and tested concepts used to identify employment relationships for many years.  New ways of working do not mean new tests, simply that the tests have to be applied to new situations.

We can expect to hear more about gig economy cases as there are still some outstanding issues to be determined but the Supreme Court’s decision indicates a clear line of travel.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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