23 Feb 2021

Employment

Uber drivers’ Supreme Court victory represents major milestone in UK employment law

Could last week’s landmark judgment from the Supreme Court that Uber’s drivers should be classified as workers rather than self-employed bring an end to the days of companies profiting from grey areas in UK employment law?

Our head of employment law, Daniel Wilde, reviews the judgment.

On Friday 19th February, the Supreme Court upheld an employment tribunal’s decision that Uber drivers in the UK 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, granting them the entitlement to holiday pay, sick pay and the minimum wage.

This ruling concludes a five year legal battle for a number of former Uber drivers who originally took on the firm in an employment tribunal in 2016.

Uber operates by means of a smartphone app, through which passengers can book rides from drivers who also have the app. The drivers own their own cars and are free to choose when they make themselves available to accept bookings.

Uber’s position on the legal relations between the company, the drivers and passengers was that it is simply a technology platform facilitating the provision of private hire vehicle (PHV) services and that as it does not provide these services itself; rather, they are provided by the drivers under a contract concluded between driver and passenger for each journey, with Uber acting as agent, it insisted that the drivers were self-employed and not workers.

An earlier employment tribunal had found that the drivers were in fact ‘workers’, concluding that the contractual documentation did not correspond to the reality of the working relationship.

Following unsuccessful appeals to the EAT and Court of Appeal, Uber then appealed further to the Supreme Court.

In unanimously dismissing Uber’s appeal last week, the Court emphasised that the determination of ‘worker’ status under the relevant legislation is a question of statutory interpretation, not contractual interpretation. It is therefore wrong to treat the written agreement as a starting point. Rather, the correct approach should be to consider the purpose of the legislation, which is to give protection to vulnerable individuals who are in a subordinate and dependent position in relation to a person or organisation who exercises control over their work.

There are five factors that the Court considered to be relevant in this case; Uber dictates the rate of pay; Uber dictates the contract terms; Uber constrains drivers’ freedom to choose when to work once logged in to the app; Uber controls the way in which the service is delivered; and Uber restricts drivers’ ability to communicate with passengers. Lord George Legatt, who wrote the Supreme Court’s unanimous ruling, said “the question… is not whether the system of control operated by Uber is in its commercial interests, but whether it places drivers in a position of subordination to Uber. It plainly does.”

The Court noted that drivers are in a position of subordination and dependency in relation to Uber such 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.

The Court also confirmed the tribunal’s finding that time spent by the claimants working for Uber was not limited (as Uber argued) to periods when they were actually driving passengers to their destinations, but included any period when the driver was logged into the Uber app within the territory in which the driver was licensed to operate and was ready and willing to accept trips. This time constituted ‘working time’ for the purpose of the WTR and ‘unmeasured work’ for the purpose of the NMW.

It will be interesting to see how Uber will react to this judgment. The company may consider changing the way the platform is run and reducing its control over its drivers, so that they can be genuinely self-employed but this would mean it will be less able to guarantee a uniform service. The alternative would be to raise prices to cover the additional costs associated with conforming to the law and ensure its business model continues to be profitable, but this is unlikely to be popular with passengers. Either way, this ruling means that it cannot continue to operate as it currently does.

 

Going forward, there is no doubt that this judgment will affect other similar gig economy businesses. Start-up companies that want to control their workers and guarantee a particular kind of service will now have no option but to provide them with sick pay, holiday pay and the minimum wage, which will raise costs and minimise returns. Until now, many companies have been able to profit from the ambiguity that exists in UK employment law but this landmark case could well bring that to an end.

Our employment law experts are able to offer specialist advice on a wide range of issues. For a confidential conversation, please contact Daniel Wilde on 01633 244233 or email wilded@hevans.com 

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