Earlier this month, Uber, the largest player in the gig economy ran out of appeals in its long battle to retain the right to classify its drivers as self-employed rather than workers. The Supreme Court dismissed Uber’s appeal, meaning thousands of drivers became entitled to minimum wage and holiday pay.
For employers, the decision has far-reaching consequences in cases where the relationship between the organisation and self-employed people may blur into the realms of ‘worker’. To help you understand what the decision means for you, our Employment Law Solicitors in London have answered some of the most frequently asked questions related to the Supreme Court’s ruling.
What was the background to the decision?
In 2016, two former Uber drivers took the ride-hailing company to the Employment Tribunal arguing that they were workers and were therefore entitled to be paid the minimum wage and holiday pay. Uber argued that all its drivers were self-employed.
The Employment Tribunal found in favour of the drivers. Uber appealed to the Employment Appeal Tribunal and the Court of Appeal, both of whom upheld the decision in the first instance.
Why did the Supreme Court rule that Uber drivers were not self-employed?
The Supreme Court upheld the employment tribunal’s decision in Uber BV v Aslam & Ors, that Uber drivers are “workers” for the purposes of the rights mentioned above. It held that worker status was a question of statutory interpretation rather than contractual interpretation and therefore the written documentation between Uber and its drivers was not the correct starting point. Instead, it was necessary to consider the purpose of the relevant legislation, which was to protect vulnerable individuals in a position of subordination and dependence in relation to another person who controls their work. The greater the degree of control, the more likely the individual is a worker.
Delivering the unanimous decision, Lord Leggatt emphasised five aspects of the findings made by the Employment Tribunal which justified the Supreme Court’s conclusion that the drivers were working for and under contracts with Uber.
- Uber set the fare and drivers were not permitted to charge more, meaning that Uber dictated how much the drivers were paid.
- All drivers had to sign a contract and were not permitted to negotiate the terms.
- Once a driver had logged onto the Uber app, their right to turn down requests for rides was constrained by Uber.
- Uber exercised considerable control over how the drivers did their work; for example, passengers were encouraged to rate drivers on a scale of 1 to 5 and warnings were given for low scores. If the driver’s average score did not improve, Uber would end its relationship with them.
- Uber took active steps to prevent passengers from developing a relationship with its drivers beyond a particular ride.
Taking these factors together, it was clear that the services provided by the drivers were very tightly defined and controlled by Uber and that, accordingly, they were workers.
In addition, the Court held that the drivers’ working time under the Working Time Regulations was not limited to the time spent driving passengers to their destinations but started from the moment they logged in to the Uber app, within the territory in which they were licenced to operate, and were ready and willing to accept rides.
Lord Leggatt concluded:
“Taking these factors together, it can be seen that the transportation service performed by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber. Furthermore, it is 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. From the drivers’ point of view, the same factors – in particular, the inability to offer a distinctive service or to set their own prices and Uber’s control over all aspects of their interaction with passengers – mean 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.”
What is the difference between a worker, employee, and self-employed person?
The Supreme Court upheld that Uber drivers were ‘workers’ as opposed to ‘employees’. A worker includes an individual who works under a contract, whether written or oral, whereby the individual undertakes to perform personally work for the other party to the contract, provided that the other party is not, in reality a client or customer of the individual.
An employee is defined under section 230(1) of the Employment Rights Act 1996, as a person who has entered into or works under a contract of employment. The contract can be in writing or implied by the structure of the working relationship.
A self-employed person is someone who runs their own business and takes responsibility for its success. An employer has no responsibility in terms of employment rights and, subject to any commercial contract which is negotiated by both parties, a self-employed person is in charge of how and when their work is undertaken.
In determining whether an individual is self-employed or a worker, the courts will look at the reality of the working relationship rather than the label that the parties may have stated in the contract between them.
What advice do employment lawyers say to take in light of the Uber decision?
This decision leaves Uber vulnerable to claims from its workers for up to two years’ back pay or £25,000 (whichever is larger) in an employment tribunal, or up to six years’ back pay in the county court. They will also be able to claim 5.6 weeks’ annual leave each year. However, they will not have employee rights, such as a right to a statutory redundancy payment or protection from unfair dismissal.
Many linked cases have been stayed pending the outcome of this case in the Supreme Court and the floodgate may open for many more. That said, the Court’s finding that the Uber drivers were workers was fact specific and it may be that a different decision could be reached on a different set of facts.
If you are unsure as to whether certain members of your team are employees, workers, or self-employed, speak to one of our Employment Law Solicitors in London who can quickly advise you.
To make an appointment to discuss employment law matters please email us or phone 020 8349 0321.