A big day in the employment law world. The Uber decision is out and Uber drivers have officially been classified as workers and are not self-employed contractors for the purposes of employment legislation. What does this mean in practice and for the wider gig economy?
The decision of the Supreme Court to class Uber drivers as workers means that thousands of Uber drivers may now be entitled to bring backdated claims for both national minimum wage and holiday pay.
For the gig economy and companies who engage staff on a similar basis to Uber, the ruling will also have significant consequences moving forward.
The Uber case has always been about the tension between flexibility and employment rights. There may be advantages to self-employment on both sides, in terms of individuals being able to work with flexibility on their own terms and companies saving the costs which flow from the employment rights associated with employees or workers for the purposes of employment legislation.
The Supreme Court has now ruled that working arrangements should not be struck, which essentially come at a cost to individuals working with no possibility of improving their economic position through their professional and entrepreneurial skills.
The line between self-employment and workers has become blurred and the Uber case grappled with making the distinction.
The case highlights that ultimately labels count for nothing. It is all about the reality of the relationship between the parties and what is happening on the ground, no matter what the paperwork says (or does not say in this case as there were no written contracts between Uber London and the drivers).
The Supreme Court confirmed that the terms of a written contract were not the starting point and the correct approach was to consider the purpose of employment legislation, which is to give protection to vulnerable individuals who are in a subordinate and dependent position in relation to a person or organisation who exercises control over their work.
In the case, Uber tried to position itself as a booking agency whose app served as a booking and payment service. Uber argued that it did not provide the services itself and drivers made contracts directly with customers, with Uber acting as agent.
But the Court found that it was Uber London who accepted bookings as a principal (and not as an agent) and that to fulfil the obligation to the passenger, entered into a contract with the drivers. Uber was also found to control its drivers, something which does not exist in a genuine self-employment situation.
Some of the key factors around this were that:
- Uber sets the contract terms on which drivers perform their services and drivers were unable to negotiate these
- Uber dictates how much drivers earn as they set the fare
- Uber restricts drivers’ ability to communicate with passengers
- Uber constrains drivers’ freedom to choose when to work once logged in to the app and drivers could be penalised if they rejected too many rides
- An Uber driver’s service is monitored through the star rating and Uber can terminate the relationship if this does not meet their required standards
It was on this basis that the Supreme Court determined that Uber drivers were in position of subordination to Uber and so should be considered workers as opposed to self-employed contractors.
The drivers were deemed to have been ‘workers’ from the moment they switched on their apps and were ready, willing and available for work in their area, until the time when they switch their apps off at the end of the day.
Uber drivers on these terms are conditions, are now entitled to bring backdated minimum wage claims based upon their entire working day and not just when they had a passenger in their car. They are also entitled to bring backdated holiday pay claims and could claim up to 5.6 weeks paid annual leave each year.
This is a stark reminder to companies to ensure that the documents they use to engage staff genuinely reflect the reality of the working relationship and that if they wish to engage individuals on a self-employed basis, then they may need to relinquish some control over the way in which those individuals work.
Going forward the case may also set a precedent for individuals engaged under similar terms and apps, who may use the factors considered by the Supreme Court in this case to bring similar employment related claims.
The above is accurate as at 19 February 2020. The information above may be subject to change during these ever-changing times.
The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.