The Supreme Court rules that Uber drivers are workers

United Kingdom

On Friday, the Supreme Court released its eagerly-anticipated judgment in the case of Uber BV and others v Aslam, Farrar and others [2021] UKSC 5, unanimously dismissing Uber’s appeal and upholding an Employment Tribunal (“ET”) decision (and the subsequent conclusions of the Employment Appeal Tribunal and the Court of Appeal) which found that Uber drivers are “workers” who are entitled to worker rights. The Supreme Court also found in the drivers’ favour in respect of the second limb of the appeal, namely that Uber drivers are “workers” from the time that they are within their working territory, have the Uber app switched on and are ready and willing to work.

Mr Aslam, Mr Farrar and several other Uber drivers brought claims against Uber for a failure to pay national minimum wage (“NMW”) and to provide paid leave on the basis they were “workers” and were entitled to such “worker” rights. Uber has always classified the drivers who operate through its platform to be self-employed, on the basis Uber provides technology for the drivers to use and acts as an agent for drivers when accepting private hire bookings. Consequently, it did not consider them entitled to the minimum rights which are afforded to “workers” in the UK.

This decision means that Uber drivers who are engaged by Uber on the same terms to the claimant drivers are “workers”, entitled to typical “worker” rights including the right to be paid NMW and holiday pay. It also means that they have the protection from unlawful discrimination and the right not to be subject to whistleblowing detriment.

Background to worker status

Employment law distinguishes between three different types of individuals in work:

  1. employees employed under a contract of employment;

  2. self-employed individuals who are in business on their own account, undertaking work for clients and customers; and

  3. workers, who are entitled to certain statutory rights. The Employment Rights Act 1996 provides that a worker is an individual who enters into or works under:

  • a contract of employment, or

  • any other contract, express or implied, 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 Supreme Court decision

The Supreme Court was required to consider the following two key points:

  1. whether the Uber drivers were working under contracts with Uber, undertaking to perform services for Uber, or whether they are instead regarded as performing services solely for and under contracts with passengers through Uber as its agent; and

  2. if the Uber drivers were “workers”, what periods constituted their “working time”.

In respect of the first point of appeal, the Supreme Court rejected the argument that Uber contracts as a booking agent for drivers. Uber would have no means of performing its contractual obligations to passengers without drivers to perform driving services for it. It therefore followed that Uber entered into contracts directly with its drivers, under which its drivers undertake to provide services personally for Uber.

Following the principles laid down in Autoclenz v Belcher & Ors [2011] UKSC 41, the starting point in determining whether an individual falls within the statutory definition of a “worker” should not be the terms of a written contract, particularly given (1) the balance of power between an employer and “worker”, (2) the employer’s ability to dictate the terms and (3) the worker’s often inability to influence such terms. Rather, it should be the reality of the relationship, taking into account all the circumstances of the situation, of which the written agreement is only part.

The Supreme Court referred to the need to apply the words of the statute to the facts of the individual case, viewing the facts realistically and keeping in mind the purpose of the legislation. That purpose 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 greater the extent of such control, the stronger the case for classifying the individual as a “worker” who is employed under a “worker’s contract”.

In considering the status of the drivers, firstly the Supreme Court considered that they have a substantial amount of autonomy and independence, as they are free to choose when and where to work within the territory operated by Uber and they have no contractual obligation to Uber when they are not working.

However, the Supreme Court found that there are a series of five factors worth emphasising which suggest Uber exerts control over its drivers, indicating a relationship beyond that of an independent contractor:

  1. Uber fixes the remuneration it pays to its drivers and the drivers have no influence over that pay, other than by choosing when and how much to work. Uber also fixes its ‘service fee’, which it deducts from the fares it pays to drivers.

  2. Uber presents written terms to its drivers which they have to accept in order to use the app and there is no practical possibility for the drivers to negotiate different terms.

  3. Uber constrains a driver’s choice about whether to accept ride requests:

    • Uber controls the information provided to drivers in the app, such as by providing a passenger’s average rating and by only providing the passenger’s destination when the passenger is picked up; and

    • Uber monitors drivers’ rate of acceptance and cancellation of trip requests sent to them via the Uber app. If a driver’s acceptance rate falls below 80%, they receive warning messages reminding them that when logged in, they should be willing and able to accept trips and requesting an improvement in performance. Drivers can be locked out of their account for a short while if they repeatedly decline requests.

  4. Uber exercises control over the way its drivers deliver the services:

    • Whilst drivers provide their own car, Uber specifies a list of accepted makes and models, requires their cars to be in a good condition, to be of no more than a certain age and lists its preferred colours; and

    • Uber controls a driver rating system, whereby passengers rate drivers after each trip. If drivers who have completed more than 200 trips have an average rating of below 4.4 (out of 5), they become subject to interventions aimed at helping them improve, and a failure to improve can result in the termination of a driver’s relationship with Uber. Ratings are not provided to passengers to assist them in choosing a driver (much like when customers choose a product or service); rather, ratings are used as a performance management tool, which is characteristic of an employment relationship.

  5. Uber takes active steps to prevent drivers from establishing relationships with passengers beyond an individual journey, for example by the app restricting drivers and passengers from sharing contact details.

Upholding the ET’s finding that these Uber drivers were “workers” with “worker contracts” within the meaning of the statutory definition, the Supreme Court found that Uber has control over all aspects of their interaction with passengers, meaning that drivers have little opportunity to improve their economic position (other than by conducting additional trips) and that the conclusion of the ET was the only conclusion which it could reasonably have reached.

In respect of the second point of the appeal, the Supreme Court concluded that the ET was entitled to find that, as drivers were required to be willing and able to take trips and were penalised if they failed to do so, the claimant drivers came within the definition of a “worker” when they logged onto the app in their territory. The time they were “on call” i.e. when they were logged into the app in their territory and available to accept a trip request, constituted working time for the purposes of the Working Time Regulations 1998 and the National Minimum Wage Regulations 2015.

Comment

Whilst the nature of employment status claims mean judgments are very fact-specific, this decision has wider implications for the vast numbers of individuals engaged in the gig economy. The gig economy has been consistently growing since the Uber case’s first instance decision in the ET; in 2019 it was estimated that almost 1 in 10 adults in the UK worked in the gig economy, an increase from around 1 in 20 in 2016. The global coronavirus pandemic has only accelerated the growth of atypical working arrangements, as individuals have turned to alternative methods of working to support themselves as unemployment rose and more traditional forms of employment declined.

This is the now the latest case in a recent stream of “worker” status cases from individuals against businesses including Addison Lee, Pimlico Plumbers and CitySprint. This wave of cases relating to the gig economy has highlighted the issue of employment status and the fine balancing act between the need to give appropriate rights to “workers” versus an employer’s need for flexibility among its workforce. Employers operating in the gig economy, or who rely on a flexible and/or self-employed workforce, should consider this case law and whether they should re-assess the structure of their workforce if there is a risk that they engage independent contractors who should be classified as “workers”.

The Taylor Review of Modern Working Practices, published in 2017 and the Government’s subsequent Good Work Plan published the following year recommended greater certainty and protections for those working within the gig-economy, adding to the pressures for reform in this area. The Government consulted on employment status in early 2018 and committed itself to legislating to improve the clarity of the employment status tests and to reflect the reality of modern working relationships. To date no legislation has been published but this case may drive forward interest in what is clearly a problematic area.

Just last week, Uber published a white paper calling for a new industry-wide standard for platform work which provides protections, benefits and decent earning opportunities for drivers and couriers engaged in platform work, but “which doesn’t come at the cost of flexibility or job creation”. It remains to be seen whether an industry-wide standard will be established or legislation enacted, and whether it’s possible to balance that with flexibility in a technology-driven and dynamic workforce.