Uber drivers are 'workers' says Supreme Court

Uber BV v Aslam

Drivers for Uber are workers and therefore entitled to paid holiday, minimum wage and rest breaks.

In the UK there are three categories of persons working: independent contractors with no employment rights, employees, with full employment rights, and a middle category known as ‘workers’ who have some employment rights such as a right to paid holiday, minimum wage and rest breaks. These are individuals performing work personally under a contract who are not in business on their own account.

All employees are workers but not all workers are employees. A useful example of the difference between the two is a person who works a few hours a week as an administrator, fitting it in around other things, letting the business know when she will be popping in and a person who has set up a limited company supplying her administration services to others. The former is going to be a worker and possibly an employee, the latter is going to be an independent contractor as they are in business on their own account.

Since 2016 there has been litigation over the status of a number of sections in the ‘gig’ economy – primarily delivery drivers. This has included City Sprint and Deliveroo – the former couriers being held to be workers but the delivery riders of Deliveroo were not. Deliveroo apparently even uses language to try and ensure there is no doubt about the status of their riders – ‘on-boarding’ instead of hiring and ‘supplier agreement review’ rather than performance management warning.

However, the highest profile of these cases has been the Uber case where drivers alleged that they were workers.

Background

In October 2016, an employment tribunal held that a group of Uber drivers (supported by their union the GMB) are not self-employed but are ‘workers’ who are entitled to workers’ rights including to be paid the National Minimum Wage and receive paid holiday. As part of its defence Uber denied that its drivers were entitled to workers’ rights, as it is just a technology company not a taxi provider, and that Uber drivers do not work for Uber but instead work for themselves as self-employed businessmen and women. Uber appealed, arguing that the tribunal had got it wrong and that it was in fact acting as agent for the drivers who were not workers but independent contractors.

The EAT dismissed the appeal on all grounds and in relation to the question of the contracts it said that the case law was clear - tribunals must look at the reality of the situation rather than what is said in the contract. The reality was that despite what the contracts said, the drivers were incorporated into the Uber business of providing transportation services, subject to arrangements and controls that did not point to a direct contractual relationship with the passenger every time and therefore away from the argument that they were working in business on their own account. Uber appealed.

Court of Appeal decision

The Court of Appeal, by a 2:1 majority, dismissed the appeal (Lord Justice Underhill, an eminent employment law judge and past President of the EAT, dissenting from the majority view).

The essential question as regards worker status was whether, as the drivers argued, Uber contracts with the passengers to provide driving services, which the drivers perform for it; or whether, as Uber argued, it acts only as an intermediary, providing booking and payment services, and the drivers drive the passengers as independent contractors. The written terms provide the latter.

The majority of the Court of Appeal held that these terms do not reflect the practical reality of the relationship and can therefore be disregarded. It relied on the 2011 Supreme Court decision in Autoclenz Ltd v Belcher which it saw as holding that a court can disregard the terms of any contract created by the employer in so far as it seeks to characterise the relationship between the employer and the individuals who provide it with services (whether employees or workers) in a particular artificial way.

The court also found helpful the 2018 case of Addison Lee v Lange which held that the tribunal had been entitled to disregard clauses in the driver contract which did not reflect the reality of the bargain between the parties.

Lord Justice Underhill, dissenting, would have held that far from being unrealistic or artificial, there was no inconsistency between the written terms and the working arrangements: those arrangements were not essentially different from those commonly applying where taxi and minicab owner-drivers are booked through an intermediary. As to the effect of Autoclenz, he was of the opinion that it:

‘gives no warrant for disregarding the terms [of the agreement] … [It] is an important tool in tribunals' armoury because it enables them to look to the reality of a relationship rather than a false characterisation imposed by the employer. But the premise is that the characterisation is indeed false. … [It] does not permit the re-writing of agreements only because they are disadvantageous. Protecting against abuses of inequality of bargaining power is the role of legislation …’

The majority also held that drivers are under a positive obligation to be available for work while the app is on, and that that amounts to ‘work’ for the purpose of the Working Time Regulations 1998. Lord Justice Underhill would have held that drivers should only be treated as working from the moment that they accept a particular trip.

Supreme Court decision

The Supreme Court unanimously dismissed the appeal by Uber.

It upheld the decision of the tribunal by holding that drivers for Uber are workers and therefore entitled to paid holiday, minimum wage and rest breaks. These are individuals performing work personally under a contract who are not in business on their own account. They have also upheld the tribunal’s original decision that a driver’s working time is not limited to periods when they are actually driving a passenger but includes any period when they are logged into the app.

The Supreme Court emphasised that the determination of ‘worker’ status is a question of statutory interpretation, not contractual interpretation, and that it is therefore wrong in principle to treat the written agreement as a starting point. It also emphasised that the legislation is there to protect vulnerable individuals from those who seek to exercise control over their workers and it is for this reason that no employer can contract out of these rules.

They said that there were five main reasons that it supported the tribunal’s decision:

  1. Uber sets the fare and the driver cannot charge any more, therefore Uber controls the rate of pay.
  2. The contractual terms that drivers sign up to are imposed and not negotiated.
  3. Drivers are penalised if they do not reach a certain level of acceptance or there are too many cancellations and if this happens a driver is logged off for ten minutes.
  4. Uber has control over the delivery by use of a rating systems and persistently low ratings sees a series of warnings and eventually drivers are no longer engaged by Uber.
  5. Uber restricts communications between the driver and the passenger to prevent them developing any kind of business relationship.

Therefore, Uber are providing a transport service which is tightly defined and controlled and the drivers are subordinates and dependent on Uber to the extent that cannot improve or develop personally either professionally or entrepreneurially and the only thing available to them is working harder to earn more money.

Link to judgment: https://www.bailii.org/uk/cases/UKSC/2021/5.html

Comment

There is now no further right of appeal against this decision and it will leave Uber in some difficulties with numerous outstanding claims by their drivers against the company, which will now need to be settled.

While all of these cases very much turn on their own facts, this decision by the most senior court in the country seems to set a different tone, really focussing on the need for protection of those who are tightly controlled by their masters and who do not have the ability to improve themselves and develop and their only way of increasing their earning power is to work harder. This change of emphasis is likely to catch most in the gig economy and there are many other cases in the process of appeal.

The government has committed, in its Good Work Plan, to legislating to improve the clarity of the current status tests, potentially placing more emphasis on control and less on the right to substitution when deciding in favour of worker status. It’ll be interesting to see the speed of the government’s response to the Supreme Court’s decision.

For an excellent but light hearted review of the decision, please see Darren Newman’s blog.