Employment Newsletter

And speaking of findings brings me to the long awaited decision in Uber BV and others v Aslam and others [2021]. After five years or wrangling, the UK Supreme Court unanimously decided that Uber drivers are workers and therefore entitled to certain employment rights, in a decision that has significant implications for employers in the ‘gig economy'.

This case began in 2016 when drivers for Uber filed a claim in the Employment Tribunal (ET) claiming to be workers as defined by s 230(3)(b) of the Employment Rights Act 1996.

Uber drivers and users are connected via the Uber app. Neither can access the other’s mobile number and drivers are prohibited from contacting the user after the ride is completed. Drivers choose when and how often they work by logging in to the Uber app whenever they are available and willing to accept rides. Drivers are expected to have a high acceptance rate. If their acceptance rate falls below 80% the driver is sent warnings which may culminate in them being logged off the app for 10 minutes if they reject 3 trips in a row. A similar process applies if the driver cancels too many trips after accepting them.

Uber also monitors drivers’ performance through its five star rating system. Drivers who fall below a certain rating receive “quality interventions” to help them improve. If their rating does not improve they may be removed from the app and their account deactivated.

The key question in this appeal was whether the drivers worked under a contract to provide services to Uber, and were therefore workers, or whether they worked “for and under contracts made with passengers,” and were therefore independent contractors.

Uber argued that when answering this question, the “starting point” for the Court is the written terms of agreement between Uber and the drivers. The company relied on a Services Agreement – which all drivers must sign – which states that when a driver accepts a ride it “creates a legal and direct business relationship between [the driver] and the User” of which Uber is not a party. The written agreement also states that Uber simply provides “access to the Uber app and payment services” and acts as a booking agent for the drivers.

The Supreme Court rejected Uber’s argument. It reasoned that if the starting point is the written terms of the agreement then the employer, as the more powerful party, would easily be able to exclude protections granted by employment legislation by simply inserting a term stating that the individuals are self-employed. Such an approach, the Court reasoned, would completely undermine the purpose of employment legislation and give companies like Uber “power to determine for itself whether or not the legislation designed to protect workers will apply.”

What courts and tribunals must do instead, the Court said, is examine how the relationship operates in practice in order to decide whether the individual meets the statutory definition of worker. The written terms of the agreement are only one factor the Court may consider when looking at the arrangement between the parties as a whole.

Using this approach, the Court ruled that the ET had been entitled to find that the drivers were workers and dismissed Uber’s appeal. The Court listed the following observations as significant in showing that Uber exercised a substantial degree of control over its drivers:

1. The fees paid to the drivers are set by Uber.
2. The contractual terms by which Uber performs its services and transports drivers are set by Uber.
3. Once logged in to the app, a driver’s choice on whether or not to accept a journey is constrained by Uber.
4. Uber exerts control over how drivers perform their services through setting the route and through its five star rating system.
5. Uber controls communication between the driver and user and prevents them from “establishing any relationship… capable of extending beyond an individual ride.”

The Court’s ruling means that Uber drivers are entitled to sick pay and paid annual leave. They must also be paid the national minimum wage for time they spend working. The Court determined that working time included when the drivers were logged into the Uber app and waiting to accept rides, not just when they were actually driving a user to their destination.

Following this decision, employers who operate in the gig economy should anticipate similar claims being brought by individuals who perform services for them. This case makes it clear that having a clause in your written agreement stating the individual is an independent contractor will not necessarily preclude a court or tribunal from ruling that they are in fact a worker. The Court will look beyond the written terms to see how the relationship operates in practice. The more control a business exercises over the individual, the more likely it is that a Court will find they are a worker.