The end of the road: Uber drivers are deemed to be workers in unanimous Supreme Court ruling
If it feels as though the Uber case has been rumbling along for some time, it has. First heard in the Employment Tribunal in 2016, the case has made its way up through numerous (unsuccessful) appeals finally arriving at the Supreme Court.
After months of waiting for a decision, on 19 February 2021 the Supreme Court reached a unanimous verdict. Uber drivers are workers and are therefore entitled to the associated rights and benefits.
We summarise below why this case is so significant, and what it means going forward.
Uber has maintained over the last five years that it is merely an intermediary; a booking and payment collection platform between driver and passenger. The contractual relationship for the work done (i.e. the transportation of passengers) was between driver and passenger. Uber drivers were therefore self-employed.
Uber wanted the Supreme Court to find that the earlier courts had not focussed enough on the way the contractual documents defined the relationship between Uber and drivers. The contractual documentation reflected a clear self-employed arrangement.
However, Uber drivers argued that the reality of the arrangement is very different. They argued that they are very much under Uber’s control and are workers, not self employed contractors.
As workers, they were entitled to various protections and benefits including:
- the right to be paid the national minimum wage;
- rights under the Working Time Regulations 1998, including holiday pay; and
- the right not to be subjected to a detriment for whistleblowing.
The key question
Are the drivers performing their services for Uber (i.e. as Uber’s workers), or for the passengers (i.e. as a self-employed business)?
Summary of the verdict
The Supreme Court found in the drivers’ favour that they are workers. In doing so, the Supreme Court relegated the contractual arrangements and focused heavily on the reality of the relationship. The Supreme Court identified several elements of control that meant that, despite how the contract was drafted, the drivers are workers:
- Uber dictates the fare, so it decides how much drivers get paid;
- Uber imposes the terms between the driver and passenger, meaning drivers have no say in their contractual terms when transporting passengers;
- Uber restricts drivers’ choice over whether to accept or decline a particular job;
- It exercises substantial control over the way that services are provided. It decides what kind of car can be used, limits drivers’ ability to choose what route can be taken, and uses a passenger rating system as a performance management tool; and
- Communications between drivers and passengers are restricted, which stops the drivers from forming an independent commercial relationship with the passenger.
In a further blow to Uber and its operation model, the Supreme Court decided that drivers are “working” when they log onto the app and are willing to accept bookings, not just when they are driving a passenger. This is significant because the right to National Minimum Wage and paid holiday accrual will therefore apply during these periods as well as when drivers are completing rides.
The Supreme Court has made clear in its decision that the written terms of the contract are not the starting point when determining employment status. The ruling recognises the unequal bargaining power between company and individual when entering into contracts for work and that the statutory protections for workers exist “to protect those whom Parliament considers to be in need of protection and not just those who are designated by their employer as qualifying for it.”
The judgment has wider ramifications for working relationships generally including those of many freelancers and consultants engaged under self-employed contracts, particularly those in vulnerable and atypical working situations. The decision reinforces the importance of considering the reality of the working relationship when engaging individuals to undertake work, rather than simply issuing a contract and relying on its terms as protection.
The way that we work as a society is continuing to evolve. Employment status is fact specific. If you require advice on employment status and contracts, please contact Leanne Good or another member of the Employment Team.