The long-awaited decision of the Supreme Court in the case of Uber BV v Aslam was handed down on Friday 19 February 2021.
The Supreme Court has ruled in favour of the Uber drivers, affirming the Court of Appeal’s ruling that the drivers are ‘workers’ and not self-employed contractors (as alleged by Uber). The Supreme Court is England’s highest court and now that the UK is no longer part of the EU, Uber will be bound by this decision with no further recourse to appeal.
In this article, Michelle Chance (Partner) and Choy Lau (Senior Associate) summarise the key findings of the Supreme Court and consider how this judgment might affect the wider ‘gig economy’.
The Uber Case
This was a test case to determine whether Uber drivers were ‘workers’ and therefore entitled to basic employment rights such as paid National Minimum Wage, holiday pay and other protections such as the right not to suffer a detriment for being a whistleblower. Other drivers’ claims against Uber were stayed pending the outcome of this case and the outcome will be a welcome conclusion to a battle that has been on-going for 5 years.
Uber asserted that they were merely an intermediary booking agent offering a software platform for drivers and passengers, akin to the services offered by travel agents to hotels, airlines and passengers. Uber said that when a journey was booked there was a contract entered into between the driver and the passenger and that no Uber company was a party to that contract.
In order to access the Uber app, drivers had to agree to a ‘Services Agreement’ with Uber BV (the Dutch company that owns the app). This agreement purported to be between Uber BV and an ‘independent company in the business of providing transportation services’ which would provide a driver to carry out the services. In reality, most drivers did not have a separate personal services company and signed up as individuals. The contractual documents in this case were complex and designed by Uber to document the drivers as self-employed and not entitled to employment rights.
Under English employment law, ‘workers’ fall into two categories:
- individuals working under a contract of employment; and
- individuals working under any other contract ‘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 the client or customer or any other profession or business undertaking carried on by the individual’
The employment tribunal held that Uber drivers were ‘workers’ within point (b) above and that they worked for Uber London (Uber BV’s subsidiary company that is licensed to operate private hire vehicles in London). They were held to be ‘workers’ during the time that they were logged in to the app and within the territory in which they were authorised to work. This finding was upheld both in the Employment Appeal Tribunal and the Court of Appeal.
Uber appealed to the Supreme Court on two points:
- That the lower courts were wrong in law to hold that the drivers were ‘workers’; and
- If the drivers were ‘workers’, they should only be considered such for the duration of any particular ride and not for the whole time that they were logged on to the app.
The Supreme Court ruled against Uber on both points. The Court highlighted 5 key findings of the employment tribunal to support their decision that Uber drivers were ‘workers’ since they were in a subordinate position to Uber:-
- Uber determined the remuneration of the drivers by setting the fare charged. Drivers were able to charge the passenger less than the fare stipulated but Uber’s commission would be based at the higher rate. The reality of the situation was, therefore, that the driver had no say in the fare charged for a particular journey;
- The contract terms on which drivers perform their services are imposed by Uber and the drivers must agree to them in order to use the app;
- When drivers are logged on to the app, the driver’s choice about whether to accept a job is constrained by Uber. Uber monitors the driver’s rate of acceptances and cancellations and drivers are penalised if too many trip requests are declined or cancelled (by being ‘frozen out’ of the app for 10 minutes and thus unable to work);
- Uber also sets service standards for drivers and uses a ratings system to ensure compliance. If a driver receives low ratings from passengers, they receive a series of warnings and may ultimately be barred from using the app if standards are not improved. Whilst ratings are used in many online forums, the Supreme Court noted in this case that the passenger is unable to choose between drivers of different ratings or pay less for drivers with lower ratings. The ratings system was, therefore, a means by which Uber could maintain performance standards and not a peer review system for passengers to decide whether to accept a particular driver for a journey; and
- Uber restricts communications between drivers and passengers and prohibits the driver from establishing any relationship with a passenger beyond the individual journey.
The Supreme Court concluded that the drivers were in a position of subordination and dependency in relation to Uber and that they had little or no ability to improve their economic position through professional or entrepreneurial skill. The only way in which they could improve their financial situation is to work longer hours whilst constantly meeting Uber’s performance standards.
Uber argued that the level of control that they exercised over the drivers was required by virtue of regulatory requirements for private hire vehicles. The Supreme Court held that many of the features of control imposed by Uber were not required by law and in any case this was not a sufficient reason to deny the driver’s ‘worker’ status and the associated basic employment rights.
What does this decision mean for Uber drivers and the wider ‘gig economy’?
The matter will now revert to the employment tribunal to determine the compensation due to the Uber drivers in this case. For the other thousand or so Uber drivers whose claims were stayed pending the outcome of this case, they will be able to proceed with their claims on the basis that they are ‘workers’, but it is likely that Uber will settle these out of court rather than incur the expense of litigation. The additional claims are estimated to be worth up to £12,000 each.
Interestingly, Uber has issued a press statement in response to this ruling to say that it respects the Supreme Court’s decision. However, Uber has not confirmed that it will now recognise all of its drivers as ‘workers’ and since 2016 (when this case first started) it has made changes to its working practices in an attempt to give drivers more control over the work that they carry out. In our view the changes are unlikely to go far enough to avoid ‘worker’ status since they will not be able to relinquish significant control without adversely affecting their business and brand. As such, if Uber does not ensure that their drivers basic employment rights such as the right to national minimum wage are met, they are likely to face further claims.
Whilst each case must be determined on its own facts, this case is a significant victory for the wider ‘gig economy’. The Supreme Court has clarified that in these cases, the starting point is to look at the purpose of the legislation which is to ‘give protection to vulnerable individuals who have little or no say over their pay and working conditions because they are in a subordinate and dependent position in relation to a person or organisation which exercises control over their work’. The tribunal in such cases will have to determine the reality of the relationship and the contractual documents will only be part of that analysis.
In addition, clauses that purport to contract out of statutory employment rights will be void, as will clauses that seek to dissuade the individual from asserting their statutory rights such as indemnity clauses.
This landmark ruling will no doubt result in an increase in claims by individuals working under similar circumstances to Uber drivers.
The case is an important reminder to employers that they cannot simply rely on a consultancy agreement to determine employment status and that the more control they assert on purported contractors, the more likely they are to be ‘workers’ entitled to basic employment rights such as national minimum wage, sick pay (subject to earning an average of at least £120 per week), holiday pay, rest breaks and protection from detriment for whistleblowing.
