The decision in the Uber drivers case at the Supreme Court has thrown light on the age-old query of the question of worker v self-employed status.
The digital age has prompted a number of legal uncertainties as to how employment law applies to new forms of work, such as work within the ‘gig economy’. Uncertainty around employment status leads to uncertainty about the employment rights of an individual, such as rights to minimum wage and annual leave. Individuals working within the ‘gig economy’ are understood to be self-employed. That means that are not entitled to many employment rights. In the case of Uber BV v Aslam the Supreme Court was asked to address this legal uncertainty and provide some clarity.
The facts
The claimants were Uber drivers and argued they fell within the definition of ‘worker’ within section 230(3) of the Employment Rights Act 1996 (ERA) and were therefore entitled to certain rights. Uber asserted that they were self-employed.
The company argued that Uber drivers are independent contractors that work under contracts made with customers and, therefore, do not work for Uber. It based its arguments on the wording of contracts between Uber BV (company that owns the Uber app) and Uber drivers. Also at issue were the contracts between Uber London Ltd (a subsidiary company that is licensed to operate private hire vehicles in London) and its passengers. One of Uber’s key points was that the drivers have a high degree of control over their working times.
The decision
The Employment Appeals Tribunal and the Court of Appeal consistently upheld the Employment Tribunal’s decision, which was that the Uber drivers were workers. The Supreme Court (‘the Court’) unanimously upheld the decision and rejected Uber’s appeal, finding that Uber drivers were indeed workers for and under contracts with Uber.
In coming to this decision, the Supreme Court considered the circumstances of the case and emphasised 5 factual aspects that indicate that drivers were workers for Uber:
- The Uber app sets the fare for services provided by drivers and prohibits them from charging more than the fare calculated by the app. Thus, Uber dictates their drivers’ earnings.
- Uber imposes the contract terms on which drivers perform their services, and drivers are unable to challenge or change these terms.
- Uber monitors the driver’s acceptance rate and imposes penalties for low-acceptance rates that may prevent drivers from working.
- Uber retains significant control over the method drivers deliver their services through a rating system. If a driver fails to manage a required average rating, Uber may terminate their relationship after several warnings.
- Uber restricts communications between drivers and passengers and takes active steps to prevent drivers from establishing relationships with passengers extending beyond the singular booking.
The Court ruled that these factors indicated the services offered by drivers through the app were very tightly defined and controlled by Uber. Uber restricts drivers’ abilities to improve their economic position through skill, ensuring that Uber drivers can only increase their earnings by working longer hours and consistently meeting standards that Uber sets. Thus, “drivers are/were in a position of subordination and dependency in relation to Uber”. Given this high degree of control over drivers, they fell within the statutory definition of ‘worker’”. They could not therefore, be classed as self-employed.
Important lessons
The Court also emphasised that the written agreement is not the starting point to determining employment status. Instead they followed their 2011 decision in Autoclenz Ltd v Belcher that recognises that employers are frequently in a stronger bargaining position to contract out of the protections afforded by employment legislation. The correct approach to determining the ‘true agreement’ in a ‘worker v self-employed’ case was to consider the circumstances of the case (only part of which was the written agreement).
The Court clarified that where the individuals such as Uber drivers are claiming statutory rights, a Tribunal should first determine whether the circumstances indicated that the claimants fell within the statutory definition of an ‘employee’ to ‘worker’ status for those rights, irrespective of what had been contractually agreed. Furthermore, in applying the statutory definition the Court also said, “….it is necessary both to view the facts realistically and to keep in mind the purpose of the legislation.”
Conclusion
On the thorny question of ‘worker v self-employed’, the Supreme Court’s decision clearly reinforces workers rights and opens the door many thousands of so other workers who are not being told by their employers they are self-employed. Identifying if individuals are subordinate and dependent on a presumed employer, will depend on the degree of control that ‘employer’ has over the work and services performed by the individuals concerned.
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