Supreme Court judgment confirms employment status for Uber drivers

On 19 February 2021, the Supreme Court handed down its long-anticipated judgment in the case of Uber BV and others v Aslam and others. The judgment confirmed that Uber drivers are workers for the purposes of English employment legislation and are therefore entitled to receive national minimum wage and annual paid leave.

The case

The case centred around the vexed question of employment status and in particular, what is a “worker” for the purposes of the Employment Rights Act 1996.

English employment law recognised 3 main types of employment status:

1. employee;
2. worker;
3. self-employed.

The employer’s labelling of the relationship is not definitive of what it actually is. The appropriate status applicable to any particular individual is currently determined by looking at the legally recognised definitions of each status, the contract and (because of the case of Autoclenz Ltd v Belcher and others [2011]), where there is a dispute as to the genuineness of a written term, the facts of the relationship between the individual and their “employer”.

The term which is most commonly used incorrectly is self-employed. There are obvious reasons why an employer would want to call an individual self-employed. It’s cheaper and less complicated. The self-employed don’t benefit from statutory protections such as national minimum wage, sick pay, paid holidays or pension auto-enrolment. Also, the employer does not have to pay employer’s National Insurance contributions (13.8%) in relation to the self-employed. For larger companies, the cost of the apprenticeship levy may also be a consideration.

The Uber case highlights that it is not always clear whether an individual is self-employed or is, in fact, in the more protected category of worker.

A worker is defined by the Employment Rights Act 1996 as someone who works under

(i) a contract of employment, or

(ii) 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 virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.

The definition requires that in assessing if an individual is a worker, there needs to be an examination of whether they undertake to do work personally or not and if so, whether the end user is a client of a business undertaking carried on by the individual.

In the Uber case, Uber drivers were contracted as self-employed but sought to establish worker status in order to benefit from national minimum wage and paid holiday entitlement. Given that Uber is reported to engage approximately 60,000 drivers in the UK at present, the consequences of a finding of worker status would be financially significant for the business.

The facts of the relationship between Uber and the drivers were complex. Uber sought to show they were like a travel agent, acting as intermediary between the driver and the passenger, as a travel agent does between airline and passenger, with no “employment” relationship of any kind with the drivers. The contractual situation was complicated, involving more than one Uber company based in the UK and Europe, an assumption that all drivers were supplied via their own intermediary company (even though that was not factually the case for most of the drivers), and documents that could constitute contractual terms between Uber and the fictitious intermediary and the individual driver as well as between the driver and passenger.

Outside of the written contractual documents, when assessing employment status at first instance, the tribunal had regard to matters such as driver induction, driver rules of conduct, the operation of the Uber app, the billing and payment arrangements used by Uber (it generated an invoice putatively from the driver to the passenger for each ride although the passenger never saw it) and consideration of both VAT law and the law governing private hire vehicles operation and licensing in order to come to its decision. The tribunal at first instance found that whilst the Uber app was switched on and the drivers were ready to accept passengers, the drivers were workers. That judgment was upheld by the EAT and the Court of Appeal.

The Court of Appeal decision was by majority, with Lord Justice Underhill disagreeing. In his view the drivers were self-employed and the contractual documents did not mis-state the true relationship between the claimants and Uber, but their relationship was one that the law, in its current form, does not protect. In his view the fact that the relationship between Uber and the drivers was disadvantageous to the drivers because of a disparity in bargaining power should not mean that it should be re-written in legal proceedings.

The disagreement between the judges shows just how difficult the case was, including the fact that current legal definitions of employment status do not lend themselves to new models of working being implemented in gig economy businesses.

Supreme Court judgment

This case was always going to be divisive. On the one hand, this is a victory for the protection of the low-paid vulnerable worker. But it may also be seen as a defeat for entrepreneurialism and technological and sociological progress.

The case also highlights the problems with the existing state of the law on employment status and how difficult it is to determine the difference between a worker and the genuinely self-employed.

On 17 December 2018, the government published the Good Work Plan in response to the Taylor Review of Modern Working Practices, a review intended to consider the implications of new models of working (including those used in the gig economy) on the rights and responsibilities of both workers and employers. One of the findings of the review was that the test for worker status needed to be clearer. The government has stated its intention in the Good Work Plan to legislate to improve the clarity of the employment status tests but has not given detail as yet on what this would entail. Perhaps the Uber case will accelerate its considerations and action on this troublesome issue.