Final Destination: UK Supreme Court rules Uber drivers entitled to workers’ rights
In a high profile decision for the gig-economy, a unanimous UK Supreme Court has ruled that a group of Uber London drivers are workers and not independent contractors for the purposes of relevant employment legislation.
On 19 February 2021, the Supreme Court in Uber BV and others v Aslam and others upheld the decisions of the Employment Tribunal, Employment Appeal Tribunal and the Court of Appeal, which held that the drivers were entitled to workers’ statutory rights including the right to a minimum wage, holiday pay and rest breaks. The decision has wide-ranging implications for Uber and other gig-economy companies in global battles over their business model.
Uber London Ltd is a subsidiary of Uber BV, which owns the rights to the Uber app. The claimants were licensed to drive private hire vehicles (“PHVs”) in London and utilised the Uber app to provide their services. They initially brought a claim in the Employment Tribunal in 2016 to establish their employment status.
Unlike Irish employment law, there are three categories of individuals under UK statutory employment law: employees, workers and self-employed individuals. The Employment Tribunal found that the drivers were workers and that they were working for Uber London during any period when a claimant (a) had the Uber app switched on, (b) was within the territory in which he was authorised to work, and (c) was able and willing to accept assignments.
The Employment Appeal Tribunal and a majority of the Court of Appeal subsequently dismissed appeals by Uber. The Supreme Court heard Uber’s final appeal in July 2020 and recently delivered its unanimous judgment.
On what basis are Uber drivers workers?
Limb (b) of the statutory definition of a “worker’s contract” in the UK Employment Rights Act 1996 has three elements:
- a contract whereby an individual undertakes to perform work or services for the other party;
- an undertaking to do the work or perform the services personally; and
- a requirement that the other party to the contract is not a client or customer of any profession or business undertaking carried on by the individual.
Uber’s appeal to the Supreme Court concerned the first element of this definition.
Uber asserted that drivers are independent contractors who work under contracts made directly with customers rather than working for Uber, and sought to rely on the wording of its written agreements with passengers. Uber emphasised that drivers are free to decide when, where, and how much they work.
Written Agreement Not the Starting Point
The UK Supreme Court did not agree that the written agreement between the parties was the starting point in determining the drivers’ status. Relying on an earlier Supreme Court decision, the Court held that in considering an individual’s employment status for the purposes of legislation, the Court must determine what the “true agreement” between the parties is from all the circumstances of the case, even where there is a formal written agreement.
Tribunals and courts must determine if claimants fall within the definition of a “worker” in the relevant statutory provision, irrespective of what had been contractually agreed. Any terms in an agreement seeking to classify the parties’ legal relationship or to exclude or limit statutory protections are of no effect and must be disregarded.
“In short, the primary question was one of statutory interpretation, not contractual interpretation.”
Purpose of Legislation and Reality of Relationship
The Supreme Court considered the purpose of the relevant legislation was to protect vulnerable workers from being paid too little for the work they do and from being required to work excessive hours or subjected to other forms of unfair treatment.
The Court highlighted that the service performed by drivers and offered to passengers through the Uber app is strictly controlled by Uber. Furthermore, the service was designed and organised in such a way as to provide a standardised service to passengers in which drivers are perceived as substantially interchangeable. Drivers have little or no opportunity to improve their economic position through professional or entrepreneurial skill.
The Supreme Court considered the following aspects of the relationship as being indicative of worker status:
- Remuneration: the remuneration paid to drivers for the work they do is fixed by Uber and the drivers have no say in it (other than choosing when to work).
- Contractual terms: the contractual terms of the agreement between the parties is unilaterally determined by Uber.
- Choice of location: although a driver can chose when and where to work (within PHV licence territory), once they have logged onto the Uber app, the driver’s choice in relation to accepting requests for rides is constrained by Uber. Uber also has further control over the drivers – it monitors the driver’s rate of acceptance and cancellation of trip requests. Drivers can then be shut out of the app for a specific period if rates fall below a certain level. This was described in internal Uber documentation as a “penalty” and regarded by the Court as evidence that drivers are in a position of subordination to Uber.
- Control: although drivers provide their own cars, Uber vets the types of car that may be used. Further, the technology integral to providing the service is wholly owned and controlled by Uber, and is used as a means of exercising control over drivers. Uber has a ratings system of drivers. Failure to maintain a specified average rating can result in in the termination of the relationship with Uber.
- Restriction on communication: Uber restricts communication between a driver and the passenger to the minimum necessary to perform the service.
The Supreme Court held that, on the facts, it was clear that the Employment Tribunal was entitled to find that the claimant drivers were “workers” who worked for Uber London under “worker’s contracts” within the meaning of the statutory definition. This was the “only conclusion the tribunal could reasonably have reached”.
When are drivers ‘workers’?
The Court also held that the Employment Tribunal was entitled to find that time spent by the claimants working for Uber was not limited to periods when they were driving passengers to their destinations, but includes any period when the driver was logged into the Uber app within the territory in which the driver was licensed to operate and was ready and willing to accept trips.
Uber intends to launch a nationwide consultation with its UK drivers to inform its next steps, with the outcome to be shared in the coming weeks. The dispute will now return to a specialty tribunal to decide how much to award the 25 drivers who brought the case in 2016. About 1,000 similar claims against the company, which had been stayed until after the ruling, may also proceed.
While many of the high profile gig-economy cases have come before the UK Courts, the question of employment status is likely to remain an issue for employers in Ireland.
However, attempts in recent years to legislate on this topic have been unsuccessful. Two previous Private Members’ Bills lapsed in 2020 with the dissolution of the Dáil, and provisions addressing the issue of false self-employment which were included in a late draft of the Government sponsored Employment (Miscellaneous Provisions) Bill 2017, were removed prior to its enactment in 2018 on the basis that the legislation was not deemed to be the “appropriate vehicle” by the relevant Minister at the time. There is currently no reference to the issue being dealt with in the Government’s Legislation Programme Spring Session 2021.
Nevertheless, given the changing nature of the employment landscape and the increased demand for more flexibility in working patterns from both businesses and individuals alike, fair working conditions for vulnerable workers and certainty on employment status of such workers, is likely to continue to be a topical issue.
It may be that the need for legislation or reform will be driven at a European level rather than a national level. On this point, it is worth noting that the European Parliament Employment and Social Affairs Committee recently adopted a Draft Report on fair working conditions, rights and social protection for platform workers. Platform workers are those that use an online platform to access other organisations or individuals to provide specific services in exchange for payment. The Draft Report states that there is a need for European level action to overcome the existing legal uncertainty for such workers and to improve their rights. According to the Draft Report, the current European framework is unsatisfactory.
The authors would like to thank Leah O’Mahony for her contribution to this article.