23 February, 2021
The Supreme Court handed down its long-anticipated judgment about the action brought against Uber by drivers claiming to be workers as opposed to self-employed contractors. The judgment provides the answer to whether 'gig economy' workers can be classed as 'workers' for the purposes of the Employment Rights Act 1996 ('the Act'). The case has been a longstanding focus of debate and captured the attention of many due to its potential impact on employers relying operationally on the 'gig economy' model to ensure profitability.
The relevant legal provision is section 230(3) of the Act which defines a worker as an individual who has entered into or works 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 status is not by the contract that of a client or customer of any profession or business undertaking carried on by the individual.
Companies reliant on the gig economy such as Uber have historically relied on the contract of engagement and the wording used in those contracts to define the individual as self-employed as opposed to a 'worker' within the meaning of the Act.
Uber engaged taxi drivers under contracts that refer to them as being 'self-employed subcontractors.' The documentation described Uber as an intermediary, providing booking and payment services through its technology platform, and that the drivers concluded a contract with each passenger as an independent contractor. When starting work, drivers are required to log on to an app to confirm they are available for work in their area. In being treated as contractors, Uber drivers have not been entitled to the same conditions of work as those who have 'workers' status, such as the right to statutory rest breaks, minimum wage, and annual leave. This caused frustration amongst Uber drivers, who sought to challenge their status in the Employment Tribunal.
In defending the case, Uber argued that it was simply a technology platform that put drivers in touch with passengers. However, the Tribunal looked at the practical implications of the operational agreement and determined that the definitions used in the contract did not reflect the actual reality of the arrangement in pace, and accordingly determined that the drivers were in fact workers. The Court of Appeal upheld an Employment Tribunal's decision that the contractual documentation between Uber, the drivers, and passengers did not correspond with reality. The majority agreed with an expression made by the Tribunal that it was not correct to regard Uber as working "for" the drivers by providing the platform. The reality was the other way around; Uber ran a transportation business, and the drivers provided the skilled labour through which that business delivers its services and earns its profits. It was noted that Uber also exercises a high degree of control over the drivers. For example, complaints about individual drivers were dealt with centrally, and if drivers fell below a specified satisfaction rating Uber could deny them access to the app. They were also held to account if they were not picking up work when they were logged on and in the area. As such, Uber could not be said to be the driver's client or customer. The majority also held that the drivers were workers for the duration of the time that they were in the territory to which they were assigned, logged into the Uber app, ready and willing to accept rides, and were therefore 'workers' for the purposes of the Act.
Uber then obtained leave to appeal the decision in the Supreme Court and the judgment was handed down earlier today. Unsurprisingly, the Supreme Court ultimately reached the same conclusion as the lower courts, confirming that Uber drivers are 'workers' under the definition afforded by the Act. It found that Uber drivers are 'workers' from the moment they engage work by switching on the Uber app and are available for work in their area, until such time where they switch off their application at the end of the day and/or to take a break.
The Supreme Court reinforced the approach taken by the Tribunal confirming the relevant factor for determining employment status is to examine the reality of the relationship between the parties as opposed to descriptive aspects of contractual documentation.
As the drivers have now been confirmed as 'workers' under the terms of the Act, this means that they now also attract the rights and protections afforded by the Act. As such, they are entitled to minimum wage, the statutory 5.6 weeks' paid annual leave each year, protection against an unlawful deduction from their wages, the statutory minimum length of rest breaks, the right to not work more than 48 hours on average per week or to opt-out of this right if they choose and significantly, will have right to protection under Whistleblowing legislation. It is important to note that the judgment does not give them 'employee' rights, such as the right to a redundancy payment or to claim unfair dismissal.
In the immediate aftermath, the main concern for Uber may well be that drivers could now claim back pay for minimum wage (up to two years in the Employment Tribunal, or six years in the County Court), with the claims being based upon the entire working day, not just when they had a rider in their cabs. Given some estimates of the number of drivers reaching 60,000, the financial implications are considerable, and concerning both for Uber, but also for other companies and industries reliant on the gig economy who will no doubt be reviewing their terms of engagement following today's judgment.
The judgment will have a considerable impact on areas of commerce reliant on the gig economy. As such, to pre-empt difficulties or potential claims, we advise companies to carry out an audit of individuals providing services to your organisation and seek legal advice in respect of any concerns to ensure that not only are you protected from individuals seeking worker status, but also the associated legal costs in dealing with such claims even if such claims ultimately are unsuccessful.