Uber BV & others v Aslam & others
On 19 February 2021, the UK Supreme Court unanimously upheld that drivers working for ride-hailing app giant Uber Technologies Inc. are to be classified as “workers” under employment law and are not self-employed. Uber had been defeated at every stage of its appeal against the original Employment Tribunal decision in 2016.
Uber contended that it was merely an intermediary booking agent, simply facilitating the independent work of drivers; however, drivers have a sufficient degree of subordination to qualify as workers. Uber drivers’ hours of work were confirmed to have started when they log into the Uber app and were ready to accept requests for rides and accordingly, they must be paid for hours worked, regardless of the demand for rides. They now have associated worker rights including holiday pay, rest breaks, the national minimum wage and protection against unlawful discrimination.
Rationale for the Decision
In the UK, there are three categories of working relationship, from employees, who have the most rights and benefits in employment law, the self-employed, who have little legal protection and “workers,” a hybrid category, who are entitled to some rights. The tests for employment, worker or self-employment status are multifactorial and are generally considered independently of the label given to the relationship by the parties. One factor which will add weight in favour of employment or worker status rather than self-employment, is if the individual is subject to significant control over what, when and how to work and this was an important factor in this case. Elements of this control will also affect another factor, whether the individual is conducting business on their own account (consistent with self-employment) or on account of another person (more consistent with employment or worker status).
The Supreme Court made its decision on worker status based on five issues: (1) Uber controls how much drivers are remunerated for the work they do, as Uber sets fare prices; (2) drivers have no autonomy in respect to the contract or terms of service; (3) drivers are subject to Uber’s control, pursuant to a passenger ratings system, which can result in a driver’s service being discontinued, when delivering services; (4) drivers are subject to penalties if they decline a certain number of ride requests and therefore are subject to monitoring from Uber; and (5) Uber restricts communication between a driver and a passenger and no independent commercial relationship could be formed beyond an individual ride.
A further key issue in the Supreme Court decision was that the terms of the agreement between the parties should not be the starting point for determining employment or worker status. In this case, the contract between Uber and its drivers did more than simply label the relationship as one of self-employment. It described the manner of Uber’s operations, including its driver app, in terms that supported a finding of self-employment. Throughout this case, the English courts, including the Supreme Court, have consistently found that the reality of how the relationship and the driver app operated was very different from the way it was presented in the contract and was not consistent with self-employment.
Consequences for the Gig Economy
The backdated costs for over 60,000 of Uber’s workers will be significant for Uber, a company publically listed in 2019. A specialty tribunal will now decide compensation for the 25 drivers who brought the original Employment Tribunal claim. Approximately 1,000 other claims against Uber that were stayed pending the Supreme Court decision will now go ahead. Each driver’s claim could be worth around £12,000 ($16,700).
Although aspects of this particular decision were dependent on the facts of the case — in particular the way Uber and its driver app operated — this is nonetheless potentially an extremely important ruling for millions of gig economy workers in the UK. Further challenges across the gig economy may now result with businesses facing potential liabilities for significant back pay and employment related taxes.
Global Trend
As the gig economy expands, the classification and associated protections of gig economy workers has been challenged in various jurisdictions, including challenges in California against Proposition 22.
The direction of travel across Europe appears to be moving toward greater protections for gig economy workers. The European Commission is due to make recommendations on potential legislation impacting gig economy workers in early 2021 and new legislation could follow at the end of the year affecting such workers across the European Union.
For more information on how the UK Supreme Court ruling may affect business models and the risks associated with classifying the status of individuals, please contact Dan Peyton or Adam Penman.