Uber drivers are workers, Supreme Court decidesKathleen BADA
The Supreme Court has dismissed Uber’s appeal against the ruling that its drivers are workers. This long-awaited decision will have significant implications for other gig economy businesses.
The Supreme Court’s decision
The key question for the Supreme Court to decide was whether an Employment Tribunal was entitled to find that Uber drivers were workers for purpose of employment legislation. If so, then drivers would become entitled to a raft of statutory rights, including the National Minimum Wage (NMW) and paid annual holiday.
The test of employment status turns on a number of factors. Chief amongst these are whether the individual must perform services personally, the level of control exercised over the individual, and whether the individual is obliged to accept any work offered.
At court, Uber argued that its drivers are independent contractors who form separate contracts with every passenger they drive. Uber claimed its role was limited to the provision of technology services via its app, through which the organisation acted as a payment collection and booking agent. The Supreme Court disagreed with this characterisation of Uber’s relationship with its drivers however.
The Supreme Court made five key findings in determining that Uber drivers are workers:
- Uber sets the fare, drivers have no say in it and they are not permitted to charge more than the fare calculated by the Uber app.
- The contractual terms on which drivers perform services are imposed by Uber.
- Once logged on, a driver has little choice over whether to accept requests. Their activities are monitored by Uber, and they are penalised if too many trips are declined or cancelled.
- Uber has significant control over how drivers deliver services.
- Uber restricts communications between passenger and driver to the minimum necessary for each trip. A driver can’t extend their relationship with a passenger beyond the individual ride.
The Supreme Court found that this system effectively places drivers in a position of subordination to Uber. Taken together, the findings mean that Uber controls its relationship with drivers very tightly. Drivers can’t improve their economic position through professional or entrepreneurial skill, only by working longer hours for Uber. When considered in the context of the employment status test, the Supreme Court concluded that the Employment Tribunal was right to find that Uber drivers are workers. The drivers therefore now qualify for the rights afforded to workers by employment legislation.
A secondary question for the Supreme Court to consider was: during what periods of time were drivers working? This was relevant for determining the periods during which drivers would be entitled to payment of the NMW.
The Supreme Court decided that a driver is working whenever he is logged on and ready and willing to accept trips. This is a much longer worker day than Uber might have expected as it was open to the court to decide whether a driver is only working when there’s a passenger in their car.
What does this mean for other gig economy businesses?
The outcome of the Supreme Court’s case has far-reaching implications for Uber and its peers. Uber is seen as a business which embodies the gig economy so what happens to it has significant implications for other gig economy businesses worldwide. Although the case turned on some fine points that are unique to Uber’s operations, there will still be areas of concern for other gig economy businesses.
It’s apparent that Uber believed they could disguise the real nature of their relationship with the drivers by contracting them to their Dutch business (Uber B.V.) instead of their UK business (Uber London), and by saying they acted as the drivers’ agent. Courts at all levels saw through this ruse to the reality of the relationship, which was that the drivers were workers of Uber London.
Uber is now facing expensive back pay claims, particularly relating to NMW and holiday pay. This will surely affect the viability of Uber’s business model going forwards. Other gig economy businesses would do well to review their arrangements with those who provide services for them immediately to ensure any potential legal risks are adequately covered. Well-drafted contracts will be a vital tool in minimising such risk.
LexLeyton can assist with the issues raised in this article by reviewing employment contracts and related operational arrangements for areas of litigation risk. Please contact us at firstname.lastname@example.org for a free initial confidential discussion