Employment status: Uber drivers

The Supreme Court has handed down its decision on the question of whether Uber drivers are ‘workers’, for the purpose of claiming holiday pay and the national minimum wage.

Uber BV and others v Aslam and others [2021] UKSC 5

Facts

This case was brought by a group of Uber drivers, who claimed entitlements under the Working Time Regulations 1998 and to be paid the national minimum wage on the grounds that they are ‘workers’ rather than self-employed contractors.

The drivers succeeded in establishing ‘worker’ status before the Employment Tribunal, the Employment Appeal Tribunal and the Court of Appeal (see our previous report of the Court of Appeal’s decision). Uber appealed to the Supreme Court.

Supreme Court decision

The Supreme Court has unanimously dismissed Uber’s appeal, upholding the original finding that the drivers are ‘workers’ for the purpose of rights under the Employment Rights Act 1996, the Working Time Regulations 1998 and the National Minimum Wage Act 1998.

The Court held that in determining employment status, the correct approach is to start with the statutory interpretation rather than treating the written agreement with the individual as the starting point. It highlighted five key factors that were relevant to its conclusion of ‘worker’ status in this case:

1. Uber dictates the rate of pay by setting the fare calculated by the app
2. Uber imposes the contractual terms on which the drivers perform their services
3. Uber constrains the freedoms of individual drivers once they are logged into the app, by restricting their choice whether or not to accept a request for a ride through the imposition of a penalty if too many such requests are declined
4. Uber exercises significant control over how services are delivered, including the use of a ratings system
5. Uber restricts communications between drivers and passengers, preventing drivers from establishing a relationship with customers beyond a single journey.

The tight control exercised by Uber, and the drivers’ position of subordination and dependency, means that the drivers have very little opportunity to improve their economic position. They are not independent contractors or ‘entrepreneurs’. The only way in practice for them to earn more money is to work longer hours, while also meeting Uber’s performance standards.

The Supreme Court also upheld the tribunal’s conclusion that the entire period during which the drivers were logged onto the app, ready and willing to accept trips, counted as working time, not only the time spent driving passengers to their destinations.

The case now returns to the employment tribunal to determine the level of compensation awarded to the drivers.

Consequences

This decision will clearly have significant financial implications for Uber and will no doubt impact their future business model.

The Court’s emphasis on the importance of statutory interpretation, bearing in mind that the purpose of the legislation is to protect vulnerable individuals in a subordinate and dependent position in relation to those who exercise control over their work, will have much broader implications across the gig economy and beyond.

Treating the contractual terms between the parties as the starting point is, in the Court’s view, inconsistent with the purpose of the applicable legislation. The Court did not consider it to be appropriate that a business could rely on the terms of its contracts in order to determine who qualifies for statutory protection.

It had previously been established that courts could go beyond the terms of any written agreement to determine the reality of the relationship between the parties, but this decision goes further in establishing that such terms should no longer be the starting point. In practice this means that any express contractual terms relating to employment status are likely to be of minimal significance.

This is likely to present significant problems for employers who have attempted to designate workers as ‘self-employed’ in the  contractual provisions, if individuals now seek to challenge their status.

These articles are from the February 2021 issue of Employment and Immigration Law Update, our monthly newsletter for HR professionals. To download the latest issue, please visit the newsletter section of our website. For further information please contact Liz Stevens or another member of Birketts’ Employment Law Team.