Supreme Court rules Uber drivers are workers
by Tamara Barbeary
What are the implications for employers?
The Supreme Court has handed down its decision in Uber v Aslam, heard in July 2020, unanimously upholding the ruling of earlier courts that Uber drivers are ‘workers’.
The landmark ruling comes after years of litigation on the issue of whether those working in the so-called “gig economy” are truly self-employed or if, on the facts of the particular case, they can be classed as ‘workers’ and afforded the limited employment rights that are not available for contractors (minimum wage, paid leave, and other protections).
The definition of a “worker” in section 230(3) of the Employment Rights Act 1996 and other relevant legislation includes anyone employed under a contract of employment but also extends to some individuals who are self-employed (the so-called “limb (b) worker”). In particular, the definition includes an individual who works under a contract “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 Appellants (Uber and others) are members of a group of companies providing taxi booking services in the UK and internationally. Journeys are booked through the Uber smartphone app, which connects passengers to drivers. The Respondents are drivers who are or were active users of that app. They own their own cars and are free to choose when they make themselves available to accept bookings.
The drivers argued that, during the periods covered by their claims, they were “workers” for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1998, and the Working Time Regulations 1998. As such, they claimed that they were entitled to the minimum wage, paid leave and other legal protections.
Uber argued that the drivers were independent, third party contractors and not “workers”. Following a preliminary hearing, the Employment Tribunal found that the Respondents were “workers” and that they were “working” whenever they (a) had the Appellants’ app switched on; (b) were within the territory in which they were authorised to work; and (c) were able and willing to accept assignments. These findings were upheld by the Employment Appeal Tribunal and the Court of Appeal. The Appellants then appealed to the Supreme Court.
The issues to be decided by the Supreme Court were:
Key points of the ruling
The key points of the ruling are:
This means that Uber drivers are entitled to claim minimum wage (including backpay for minimum wage), with their minimum wage claims being based upon their entire working day, not just when they had a rider in their cabs. Up to two years’ backpay (whether a longer period can be claimed is not clear at this point), or £25,000 (whichever is the larger) can be claimed in an Employment Tribunal, and up to six years’ backpay can be claimed in the County Court.
The drivers can also claim 5.6 weeks paid annual leave each year and will have whistleblowing and similar rights. This judgment does not give them “employee” rights (the highest level), such as the right to a redundancy payment or to claim unfair dismissal.
Why is determining employment status so important?
As you see from the Uber case, whether, under the law, an individual has the status of an employee or a worker, or is a self-employed independent contractor, will determine the rights they are afforded.
Determining status has never been straightforward, with the courts developing various legal tests over decades to apply to the individual circumstances. The emergence of the gig economy, where individuals are engaged by businesses like Uber on a flexible, ad hoc basis, has presented problems for determining employment status, both for the purposes of employment rights and tax liability (although status for employment rights and status for tax liability is not always the same). A further complication is that a person may not have the same employment status for all causes of action and a court may apply different tests of status depending on the cause of action involved.
Put simply, status matters. A hard lesson that Uber has learned.
What is the main takeaway for employers?
The Uber case has reaffirmed the fact that it is the reality of the relationship between the parties that determines employment status, and what is written in a contract is not determinative, and not even the starting point. It is not the case that there needs to be an inconsistency in what is written in the contract and the relationship in practice. It is about looking to identify the relationship that is in issue and, if it is the type of relationship that parliament intended to protect by the employment protections.
It must be remembered that the reason for these legislative provisions is to protect vulnerable workers who may otherwise be paid too little for the work they do, be required to work excessive hours, or be subjected to other forms of detriment or unfair treatment. If employers were able to decide whether those protections come into play merely by using particular wording in a contract, it would, as stated in the Uber case “reinstate the very mischief which the legislation was enacted to prevent”.
It will now be extremely difficult for employers who seek to circumvent the statutory provisions by including various contractual terms to prevent an individual, who ought to be protected, from enforcing their rights. Employers need to ensure their written agreements properly reflect the relationship they have with individuals. If they want a significant degree of control and for those individuals to be in a subordinate working relationship, then they will need to accept that those individuals are likely to be workers.
To read the Supreme Court judgment, please click here
If you require assistance in relation to any of the above issues or any other employment related matter, please contact our specialist team here at Lennons.
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