Sue Dowling and Sophie Stone, in our Employment Law team, look at the Supreme Court's recent ruling that upheld a 2016 Employment Tribunal decision in relation to Uber and its drivers.
The technology behind the Uber smartphone app, launched in 2010, is owned by Dutch company Uber BV. Since 2016, 90,000 drivers are said to have been active with UK subsidiary Uber London, which operates in the capital and around the country. A claim was taken to the Employment Tribunal in 2016 to establish the employment status of Uber drivers – the question was whether the drivers can be classified as workers or were truly (as Uber maintained) self-employed contractors.
The Employment Tribunal was satisfied that Uber drivers met the conditions as stipulated under s.230(3) of Employment Rights Act 1996 which defines workers as:
"an individual who has entered into or works under (or, where the employment has ceased, worked under):
- (a) a contract of employment, or
- (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose statusis not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual".
The Employment Appeal Tribunal and the Court of Appeal dismissed Uber’s subsequent appeals and upheld the decision of the Employment Tribunal.
Last month, the Supreme Court unanimously upheld the previous decisions of the earlier courts in Uber BV and others v Aslam and others [2021] UKSC 5 and confirmed that Uber drivers satisfy the test for ‘workers’.
The decision itself means that Uber drivers will be afforded protection under various pieces of employment legislation, including entitlement to the national minimum wage, protection from unlawful deductions from wages, along with 5.6 weeks paid annual leave per year and whistle-blower rights.
Uber’s main argument for the drivers being independent contractors was the written contractual relationship between Uber and the drivers and the existence of a separate contract between the drivers and the end users for each ride.
The Supreme Court confirmed what had been considered at previous appeals, i.e. that an Employment Tribunal needs to consider the true nature of the relationship between the parties and how it operates in reality. Contractual documentation alone would not bind the Tribunal in making an assessment regarding employment status. Uber had argued that their drivers were only deemed as ‘working’ for periods when they were driving passengers in their private hire vehicles. The Supreme Court disagreed and held that drivers are workers for any period that they are logged on to the app within their authorised territory and are ready to accept trips.
Being signed in to the app was important as they were therefore available for work. The degree of subordination and tight control to which they were subjected was also key. Here, Uber dictated the contract, vetted the type of car used and fares were calculated by the app alone. Penalties were often imposed by Uber if a driver had a high cancellation rate (of trips). Those who are genuinely self-employed will have more freedom and flexibility over how they work.
With the worker status now being confirmed and no further right of appeal, Uber drivers are not only entitled to be paid national minimum wage but on top of this, can claim back pay for minimum wage and holiday entitlement for up to 2 years or £25,000 (depending on which is larger). Up to 6 years’ back pay could be claimed in the County Court. The claim can be based upon the entire working day as opposed to being limited to when they are driving passengers.
The issue of employment status has long been a technically difficult one and clouded with some uncertainty, given that each case inevitably turns on its own particular facts. While this decision affects Uber workers directly, the impact of the case is to further clarify, and strengthen, the position of those individuals who work in the ‘gig economy’. Organisations should be wary of relying too heavily on a written contract (specifying ‘self-employed’ or ‘contractor’ status) if the practical reality of the working relationship points to something less autonomous.
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This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
