Supreme Court confirms that Uber drivers are workers (Uber BV and others v Aslam and others)

Whether a contract is a ‘worker’s contract’ is a matter of statutory interpretation, not contractual interpretation. That involves taking a purposive approach which, in the employment context, is to protect those who are vulnerable as a result of their subordination to, and dependence upon, another person in relation to their work. In the case of Uber, the employment tribunal’s findings on the relative degree of control exercised by Uber and drivers respectively over the service provided to passengers justified its conclusion that the drivers were workers, according to the Supreme Court.

Uber BV and others v Aslam and others ([2021] UKSC 5) 

What are the practical implications of this judgment?

This judgment is of great importance as an explanation by the Supreme Court of how worker status is to be assessed. In summary, it has held that:

• whether a contract is a ‘worker’s contract’ is not to be determined by applying ordinary principles of contract law
• it is a matter of statutory interpretation, not contractual interpretation
• that means having regard to the purpose of the particular provision and interpreting its language, so far as possible, in the way which best gives effect to that purpose
• the general purpose of the employment legislation in this case is to protect vulnerable workers from being:
◦ paid too little for the work they do
◦ required to work excessive hours, or
◦ subjected to other forms of unfair treatment
• the efficacy of such protection would be seriously undermined if the putative employer could, by the way in which the relationship is characterised in the written contract, determine, even prima facie, whether or not the other party is to be classified as a worker
• such an approach is further justified by the fact that all the relevant statutes or statutory regulations conferring rights on workers contain prohibitions against contracting out
• in determining whether an individual is a ‘worker’, instead of starting with the writ-ten contract, there is no substitute for applying the words of the statute to the facts of the individual case. In doing so it is necessary both to view the facts realistically and to keep in mind the purpose of the legislation
• the vulnerabilities of workers which create the need for statutory protection are subordination to, and dependence upon, another person in relation to the work done
• a touchstone of such subordination and dependence is (as has long been recognised in employment law) the degree of control exercised by the putative employer over the work or services performed by the individual concerned. The greater the extent of such control, the stronger the case for classifying the individual as a ‘worker’ who is employed under a ‘worker’s contract’

In this case, the Supreme Court therefore looked at the relative degree of control exercised by Uber and drivers respectively over the service provided to passengers. It held that important factors were:

• who determined the price charged to the passenger
• who is responsible for defining and delivering the service provided to passengers
• the extent to which the arrangements with passengers afford drivers the potential to market their own services and develop their own independent business

The Supreme Court held that the employment tribunal’s decision on these matters justified its conclusion that the drivers were workers. It pointed in particular to the following matters:

• the remuneration paid to drivers for the work they do is fixed by Uber
• the contractual terms on which drivers perform their services are dictated by Uber
• once a driver has logged onto the Uber app, a driver’s choice about whether to accept requests for rides is constrained by Uber
• Uber exercises a significant degree of control over the way in which drivers deliver their services
• Uber takes active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride

The Supreme Court also accepted the employment tribunal’s finding that once a driver was logged in to the Uber app, was in the area and was ready and available for work that meant they were working (and therefore entitled to the national minimum wage). Given that, to date, Uber drivers will only have been paid for the time that they have a passenger that opens the way to a potentially huge claim for backpay.
In response to the judgment Uber has been reported to have said that this case only relates to a few drivers from 2016 and it has changed its business since then, including giving more control to drivers over how they earn. This judgment and the matters set out above indicate that amending its contracts in some relatively minor respect is unlikely to have the effect that Uber desires (in particular because of the prohibition on contracting-out of statutory rights). Unless it changes its business model significantly so that drivers can no longer be said to be subordinate to, and dependent upon, Uber, the drivers are still likely to be found by any employment tribunal to be workers (and therefore entitled to rights such as to the national minimum wage and holiday pay). It seems unlikely that Uber will do this but, given that (according to a report by Uber of 30 November 2020) it has over 60,000 Uber drivers in the UK, there is a potentially huge financial cost to Uber in terms of claims for backpay (and future pay until any such change is made). As well as claims by the drivers there is also the issue of whether HMRC may choose to investigate the non-payment of the national minimum wage. That would raise the possibility of financial penalties for non-payment which may be up to £20,000 per worker (for pay reference periods commencing on or after 26 May 2015. Whether HMRC has the appetite to carry out such an investigation remains to be seen.

As well as Uber, this judgment is also of significance for other gig economy platforms such as Deliveroo, whose riders are in a similar position of subordination to, and dependence upon, the business. This judgment holds that the contractual terms between the individual and the business are not determinative because the business is generally in a position to dictate those terms and there is a statutory prohibition on contracting out of employment rights. The question is whether the individual falls within the statutory definition of a ‘worker’. Gig economy businesses that are in a position of control and dictate the way in which a service is provided are likely to find that their staff have rights as ‘workers’ and are therefore entitled to the national minimum wage and holiday pay (as Yodel and City Sprint, amongst others, have found).

The issue of employment and worker status is one of which the government is fully aware. It published a consultation on 7 February 2018 seeking views on how to make the employment status rules for employment rights and tax clearer for individuals and businesses. In its ‘Good Work Plan’, published in December 2018, the government indicated that it agreed with Matthew Taylor’s recommendation that the employment status frameworks for employment tax and rights should be aligned and that it would bring forward detailed proposals on how this could be done. The government also stated that it intended to legislate to ‘improve the clarity of the employment status tests, reflecting the reality of modern working relationships’ and improve the guidance and online tools available to help people understand their status. To date, how-ever, there has been no such legislation. The expiry of Matthew Taylor’s tenure as interim Di-rector of Labour Market Enforcement at the end of January 2021, and the government’s failure to appoint a permanent Director as yet, does perhaps not bode well for this task or for the enforcement of workers’ rights generally.

Case details

• Court: Supreme Court
• Judges: Lord Leggatt, Lord Reed, Lord Hodge, Lady Arden, Lord Sales and Lord Hamblen
• Date of judgment: 19 February 2021

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