Supreme Court rules Uber drivers are workers

Years of litigation come to an end

As “workers” Uber drivers will be entitled to the national minimum wage, paid annual leave, potentially auto-enrolment, working time rights, protection against whistleblowing and discrimination and other workers’ rights. Significantly, the Supreme Court also held that the drivers were “working” whenever they were logged into the Uber app in the area where they were licensed to operate rather than only when driving passengers to their destinations.

Uber BV is a Dutch company which owns the technology behind the Uber app. Uber London Ltd is a UK subsidiary of it, licensed to operate private hire vehicles in London (there is another UK subsidiary for vehicles outside of London). The only written agreements with the drivers were with Uber BV and before using the Uber app as drivers for the first time, the drivers were required to sign a “partner registration form”.

The particular feature of the case was that the drivers’ work was arranged through Uber’s smartphone app and Uber argued that Uber BV acted solely as a technology provider, with Uber London acting as a booking agent for the drivers. Uber argued that when a ride was booked through the Uber app, there was a contract between the driver and the passenger. Accordingly, it said, drivers worked for themselves as independent contractors.

The Supreme Court disagreed. As there was no written contract between the drivers and Uber London, the nature of their legal relationship had to be inferred from the parties’ conduct.  The correct inference was that Uber London contracts with passengers and engages drivers to carry out bookings for it.

The Supreme Court found that five specific aspects of the 2016 Employment Tribunal judgment justified its conclusion that the drivers were working for, and under contracts with Uber.

• Where a ride is booked through the Uber app, it is Uber that sets the fare and drivers are not permitted to charge more than the fare calculated by the Uber app and consequently, Uber dictates how much drivers are paid for the work they do.
• The contract terms on which drivers perform their services are imposed by Uber and drivers have no say in them.
• Once a driver has logged onto the Uber app, the driver’s choice about whether to accept requests for rides is constrained by Uber, for instance, by monitoring the driver’s rate of acceptance (and cancellation) of trip requests and imposing what amounts to a penalty if too many trip requests are declined or cancelled by automatically logging the driver off the Uber app for ten minutes.
• Uber also exercises significant control over the way in which drivers deliver their services, for instance, by the use of passengers’ ratings.
• Uber restricts communications between passenger and driver to the minimum necessary to perform the particular trip and takes active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride.

As a result, the transportation service performed by drivers and offered to passengers through the Uber app is “very tightly defined and controlled” by Uber. Further, the relationship between Uber and the drivers is one of “subordination and dependency”.

Three Uber drivers (as test claims) were involved in the Supreme Court hearing and it is important to point out that the matter will now go back to the Employment Tribunal for a full merits hearing. At the time of the Employment Tribunal hearing, the number of Uber drivers operating in the UK was estimated to be around 40,000, with around 30,000 in the London area. It is unclear how many Uber drivers will be affected by the Supreme Court judgment. Uber has made changes to its business model in recent years but it is by no means clear that these are enough to prevent similar claims by current Uber drivers following this ruling.

The decision is likely to have very costly implications for Uber.

Wider implications on workers' rights for other employers

Apart from the cost implications for Uber are there any other broader implications of the Supreme Court judgment for other organisations?

Yes and no! The Uber judgment is the latest in a long line of cases about employment status. The litigation has become increasingly high-profile with the growth of the gig economy and involves organisations as diverse as Deliveroo, Pimlico Plumbers and Addison Lee. Significantly, the cases range all the way from the initial Employment Tribunal proceedings right through to the Supreme Court. The Uber judgment is consistent with the general direction of travel in the employment status litigation, where the individuals engaged were held to be workers and not self-employed.

In addition, as a Supreme Court judgment, the case is a leading authority on how to determine employment status and will be considered in other gig economy and employment status cases. The Supreme Court’s emphasis on considering the extent of subordination/dependency versus control rather than the written agreement is largely similar to the proposal for “dependent contractors” and “independent contractors” in the Taylor Review back in 2017, which the Government pledged to bring forward in legislation but has not yet done so. This ruling goes some way to implementing Taylor’s suggestions.

However, the test for deciding employment status is complex and each case turns on its own facts. Whilst other organisations may have a similar app for organising work, arranging deliveries and so on, they may have much less controlling contractual documentation in place. On that basis, the Uber judgment does not necessarily provide much guidance for other organisations in the gig economy.

The issue of contractual documentation is interesting and some of the earlier rulings have specifically held that the contractual documentation does not reflect the reality of the working arrangements. Here the Supreme Court specifically held that the test was the statutory one of what is a “worker” and the starting point was not the contractual documentation. It is meaningless therefore, to have contracts in place stating that the individual is self-employed when an analysis of the day-to-day arrangements, shows that in reality, there is a high level of control exerted over the individuals in the way in which the work is carried out. Organisations whether in the gig economy or otherwise cannot simply expect to avoid employer obligations just by labelling someone as self-employed. If that really is the business model an organisation wants then this has to be reflected in the level of genuine autonomy the individual has and of course, accurately reflected in the contractual documentation.

Finally, the very fact that the Uber judgment has been so widely reported may encourage other individuals to pursue proceedings to determine their employment status and to establish what employment rights, if any, they have.