Supreme Court confirms Uber drivers were workers

On 19 February 2021, the Supreme Court handed down its long-awaited decision in the case of Uber BV and others v Aslam and others, dismissing the appeal by the taxi booking app against the original decision that a group of drivers (who had initiated action in 2016) were workers (not self-employed) and were therefore entitled to national minimum wage, holiday pay and sick pay.

It also held that they were working from the time that they switched on the app, were in the territory in which they were authorised to use the app and were ready and willing to accept trips (i.e. not only when driving passengers).

Uber had argued that the previous courts had erred by disregarding the characterisation of the relationship in the written contracts between Uber and their drivers and those between Uber and their passengers. Uber was seeking to rely on the fact these written agreements said that Uber's role (across two various group companies) was to provide the tech, to act as a payment collection agent for the driver and to act as booking agent for the drivers.

The Supreme Court powerfully dismissed this argument – making it plain that the purposes of employment legislation (to protect vulnerable workers from being paid too little, working excessive hours or subjected to other unfair treatment) would be seriously undermined if the potential employers were given the power to decide for themselves what status an arrangement should be given. When seeking to determine whether or not an individual is a worker, the starting point is the facts of the relationship in practice bearing in mind the purpose of employment legislation; it is not the terms of the contract between the parties (although they are part of the evidential picture).  

The Supreme Court also clarified that any contractual provisions which have the object of excluding or limiting the operation of employment legislation protections directly or indirectly would be void and unenforceable. This suggests that indemnities in contracts that seek to make individual contractors liable should they bring employment claims and be successful in establishing employment status or rights are simply void.

As many of those business currently grappling with assessing their contractors who engage via private service companies for off-payroll working purposes will attest, establishing employment status is not easy.

Uber lost (four times) because they exercised a great deal of control over the drivers when they were working. The Supreme Court determined that workers needed special protection because they were vulnerable owing to subordination and dependence upon another person in relation to the work done. Control was a touchstone of subordination and dependence. The greater the extent of control, the stronger the case for classifying the drivers as workers.

The Supreme Court felt that there was a sufficient degree of control to establish worker status (personal service, another component of the worker test, was not significantly at issue here because the regulation governing taxis in London required personal licenses).

In terms of control, subordination and dependency, Uber:

• determined the price for the fare and the amount charged for using the app
• dictated the contractual terms
• controlled information between driver and passenger
• did not give the driver the chance to reject fares to certain destinations
• monitored and sanctioned driver's acceptance rates
• managed the performance of drivers via satisfaction scores
• provided no way for drivers to improve their position using their professional skill (beyond working more) taking active steps to prevent the driver having an agreement with a passenger outside of the app
• vetted their choice of vehicle
• dictated the route to be taken

Uber had argued that this level of control was only in place for commercial reasons but the Supreme Court held it did not matter why the level of control was in place, the question is "whether the system of control operated by Uber… places drivers in a position of subordination to Uber. It plainly does".

The Uber claimant drivers in this claim are now entitled to back pay for national minimum wage, holiday pay and sick pay.

Uber is denying these rulings affect more than the limited claimants in this specific case – and that the findings have any impact on more recent practises which they claim have given drivers far more control. The GMB union however is representing thousands of drivers in a group action and suggests that Uber will need to pay out compensation in the region of £120 million (suggesting tens of thousands of claimant drivers are entitled to an average of £12,000).

What are the practical take away points for businesses?

Uber lost this legal battle on the facts of how their relationship worked with their drivers in 2016. It is much easier to read and understand these findings on these facts than it is to say with certainty whether different arrangements definitely will or will not cross the threshold into an employment relationship (be that worker or employee).

The key practical points are that:

• You cannot rely on legal drafting of contracts to be determinative of the engagement relationship as you would like it to be, rather than as it is (or as it later turns out to be).

• Trying to contractually put contractors off bringing employment status or employment rights  by claims including contractual indemnities purporting to make them liable for any award is not going to be effective (and more contractors will become aware that this is the case).  

• Whether or not you operate in the gig economy sphere, if you want to control contractors with a view to establishing a minimum kind of service or experience, the more control you exercise in this way without a meaningful relatively unfettered right to substitution, the greater the risk that you should be prepared to recognise these contractors as workers and to factor the costs of employment rights (such as sick and holiday pay and minimum wage) into your cost/pricing structure in order to avoid costly litigation and unexpected awards rulings. 

• The greater the number of contractors you gamble can be deemed to be outside of worker or employee status (for both employment and tax purposes), the greater the financial exposure.