On Friday 19th February the Supreme Court passed down its ruling in Uber BV and others (appellants) v Aslam and others (Respondents) [2021] UKSC 5. The Supreme Court ruled that Uber was not entitled to classify is drivers as independent contractors. The drivers should be classified as workers rather than employees but even as workers they are still entitled to rights such as the national minimum wage and statutory holiday pay.
Background
You can see why Uber felt the need to take the case all the way to the Supreme Court. With over 60,000 drivers just in the UK on the face of it the decision is likely to have a significant impact on Uber both financially with regard to potential retrospective claims but also how it organises its business moving forward. However, Uber has already modified its approach to working with its drivers including providing them with access to insurance to cover sickness as well as allowing them greater control which may much reduce any retrospective application of the ruling. Knowing the legal team at Uber, they will have taken a lot of remedial action already but there will be a knock on impact here for the gig economy more broadly.
Points for determination:
The Supreme Court were asked to consider whether the employment tribunal was entitled to find that drivers whose work is arranged through Uber’s app work for Uber under workers’ contracts and so qualify for the national minimum wage, paid annual leave and other workers’ rights; or whether, as Uber submitted, the drivers do not have these rights because they work for themselves as independent contractors, performing services under contracts made with passengers through Uber as their booked agent. The secondary question, if Uber was refused its appeal on this first point, was whether the drivers who had brought the claim were working under contracts whenever they were logged into the app within the territory in which they were licensed to operate and ready and willing to accept trip, or as Uber argued, they were working only when actually driving passengers to their destinations.
The Supreme Court found in favour of the drivers on both counts.
Point 1:
On the first point, argument of Uber was that the wording of the written contract the Uber required its drivers to sign stated that when a request for a journey is accepted through Uber’s app a contract between passenger and driver is created to which Uber is not a party. Uber also argued that the contract made it clear that the only role of Uber BV is to provide technology services and to act as payment collection agent for the driver and the that only role of Uber London (and other UK Uber companies) is to act as a booking agent for drivers.
Central to the approach taken by the Supreme Court was that employment legislation was there to “give protection to vulnerable individuals who have little or no say over their pay and working conditions because they are in a subordinate and dependent condition.” Given the lack of equality of bargaining power the employer is often able to determine the contract in their own favour. The Supreme Court therefore emphasised that the determination of “worker” status under the relevant legislation is one for statutory interpretation rather than simply contractual and so the contractual agreement was not the correct starting point. “..it can immediately be seen that it would be inconsistent with the purpose of this legislation to treat the terms of a written contract as the starting point in determining whether an individual falls within the definition of a “worker”.
Taking the written contract as the starting point to determine worker status would simply “reinstate the mischief which the legislation was enacted to prevent.”
Many employment lawyers and employers alike who will have used the contract as the starting point and then informed their view of worker status around the factual circumstances surrounding the performance of the contract. This judgment though makes it clear that the wording of the contractual documents, whilst relevant, is not conclusive.
Looking at the factual circumstances around the contract, the Uber drivers had substantial autonomy and independence. They were free to work when they wanted and to do as much or as little as they wanted wherever they want int he territory in which they operated. That ethos and approach is central to the gig economy. It was not suggested though that the workers performed their services under an umbrella or overarching contract with Uber London. Five factors were taken into account by the tribunal and in turn the Supreme Court:
(1) the remuneration paid by Uber to the drivers for the work they do is fixed by Uber and the drivers have no say in it. Uber also fixes the amount of its service fee which it deducts from the fares paid to drivers as well as the discretion whether to fully or partly refund a passenger;
(2) the contractual terms on which drivers peform their services are dictated by Uber;
(3) although the drivers have the freedom to choose where and when to work, once a driver has logged onto the Uber app, a driver’s choice about whether to accept requests for rides is constrained by Uber. The driver is not informed of the passenger’s destination until the passenger is picked up and therefore has no opportunity to decline a booking on the basis that the driver does not wish to travel to that particular destination;
(4) Uber exercises a significant degree of control over the way in which drivers deliver their services. Uber vets the types of case that may be used. The technology which is integral to the service is wholly owned and controlled by Uber and is used as a means of exercising control over the drivers. Failure of a drivers to maintain adequate levels of passenger ratings was also seen as Uber exercising control;
(5) Uber restricts communication between passenger and driver to the minimum necessary to perform the particular trip and tales active steps to prevent drivers from establishing any relationship with a passenger;
It’s not an argument that was accepted by Lord Leggatt, one of the seven justices who passed down the ruling. The view of the justices was that “it can be seen that the transportation service provided by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber.”
Point 2:
On the second point of the appeal, the interpretation of the justices was that as soon as the driver logs on to the Uber App they came within the definition of a “worker” by entering into a contract with the company. On the facts of the particular case, a driver’s place of work is wherever his vehicle is currently located. A driver working under a worker’s contract with Uber London including time spent “on duty” logged onto the Uber app in London available to accept a trip request is “working time” within the meaning of the Working Time Directive and Regulations.
The Supreme court confirmed the employment tribunal’s finding that drivers’ working time includes all of the time they are in the territory in which they are authorised to work, logged into the app and ready and willing to accept work.
It’s difficult to nail down how many gig economy workers there are in the UK now – some sources say 5.5million workers, others quote up to 7 million .. the simple fact is there are a lot of people who earn either a primary or secondary income from the gig economy in the UK. There needs to be some proper clarification given to employment and worker status through effective legislation that the courts can then apply.
At the moment, those businesses in the gig economy need to be careful to ensure that the relationship they create with their workers is really the relationship they intended. It will be interesting to see how Deliveroo deals with the Supreme Court’s judgement as a “risk factor” in its prospectus for its forthcoming IPO.
Practical Pointers:
- Check your contract terms: bizarre to start here as the Supreme Court has said that it isn’t the correct starting point, but it is still a significant factor when taken into account with the factual circumstances of the relationship. Standard provisions in particular describing what the proposed approach is in relation to control and supervision, mutuality of obligation and substitution all need to be included;
- Factual Circumstances: Ensure that how you intend to operate in the contract is how you actually operate on the ground. This is often affected by various policies and procedures being issued as supplemental to the contract – if these policies and procedures can amount to significant control over how an individual discharges their duties then it may fall foul of the guidance given in this case;
- Contract in a way that reflects how the relationship should work: Consider an umbrella contract: at arch.law we ask our arch.resource members to work under an umbrella contract operated for us by Brookson One, ensuring that the individuals receive the benefit of the statutory protection that they are entitled to;
- Speak to your arch.law member: we are well set up to advise on employment status including delivering volume contract reviews particularly when using Summize as our review tool. We can help navigate the contractual framework, reviewing it in conjunction with the policies and procedures as well as helping you to sense check what actually happens on the ground.
Overview:
There are already plenty of barriers out there to creating opportunities for people to earn a living – and there are plenty of people who actually really enjoy the flexibility and freedom offered to them by working in the gig economy. We need to make sure that we remove as many of these barriers as possible to ensure that people that want to work in this way can do so, whilst still protecting the rights of those least capable of protecting themselves.
