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DFA Law - Michael Nadin

Employee worker or self-employed update following Uber decision

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

By Michael Nadin

Update on employment Status claims

Establishing “worker” status (as separate from being self-employed) creates access to a number of rights, including:

  1. Protection from unlawful deductions from wages
  2. Entitlement to receive the national minimum wage
  3. Entitlement to paid annual leave

If someone works under a contract of employment then their worker status is pretty clear.

However, the law also states that an individual can be a worker where they work a contract requiring them to personally do work or services for another party who is not (by virtue of the contract) a client or customer of any profession or business undertaking carried on by the individual.

Regardless of what label a contract puts on the relationship the parties, if a dispute arises about worker status, a tribunal will look at the reality of the working relationship.

The tribunal is able to ignore the label (such as a declaration that the individual is “self-employed” or a “contractor”) that the parties might have stated in the contract.

Uber BV and others v Aslam and others [2021] UKSC 5 (19 February 2021): decision of the Supreme Court

Uber owns and operates a smartphone app through which customers order a private hire vehicle and pay the fare.

Uber argued that its drivers were self-employed and that:

  1. Uber is a technology platform facilitating the provision of transportation services; it does not provide those services itself.
  2. The transportation services are provided by the drivers. A contract is concluded between driver and passenger for each ride.
  3. Uber acts as agent for the drivers, using the Uber app.

A number of Uber drivers brought claims alleging failure to pay the national minimum wage and for a failure to provide paid annual leave.

The employment tribunal concluded that the drivers were workers for as long as they were:

  1. In the territory in which they were authorised to drive (in this case, London and some surrounding areas).
  2. Signed in to the Uber app.
  3. Ready and willing to accept bookings.

Uber appealed to the Employment Appeal Tribunal (EAT) but the appeal was dismissed and Uber appealed to the Court of Appeal.

The Court of Appeal also dismissed the appeal, agreeing that the drivers were workers and that they were working during any period when they were logged in to the app. However, the Court of Appeal did grant Uber permission to appeal to the Supreme Court.

Decision

The Supreme Court unanimously dismissed the appeal.

Uber argued that it acted only as a booking agent for the drivers, and that the drivers entered into a separate contract with the passenger in relation to each trip. However, the court rejected this argument on the basis that there was no factual evidence to support it.

The court concluded that, in relation to any booking Uber accepted, Uber contracted with the passenger to carry out that booking.

There was no contract between the driver and the customer and therefore the driver’s contract was with Uber.

An employer is often in a position to dictate contract terms, and an individual often has limited ability to influence those terms.

Previous case law has made it clear that the question of whether an individual was a worker was a case of statutory (based on legislation), rather than contractual, interpretation.

The purpose of the law on worker status is to protect vulnerable workers.  The law prevents employers from contracting out of the protection it provides.  The more control an employer has over the individual and the more protection the individual is deemed to require.

Although the written contract between the parties should not be ignored entirely, the law would be seriously undermined if the employer could write the contract in such a way as to deny an individual worker status.

In this case, the drivers were contracted to personally perform services for Uber when they were working. The following important points highlight why this finding was reached:

  1. The drivers’ pay was fixed by Uber and the drivers had no say over the amount of the fare. Uber also decided the amount of a “service fee” which was deducted from the amount paid to the drivers.
  2. The contractual terms were dictated by Uber.
  3. Once drivers had logged in to the app, they had limited choice about whether to accept fares. Uber monitored the driver’s rate of acceptance and cancellation of trips and imposed penalties where the cancellation rate exceeded a certain level by logging the driver off the app for a period of time.
  4. Uber controlled the way in which drivers delivered their services. It had control over the type of car that could be used, decided the routes to be used and imposed a driver rating system which was used as an internal tool for managing performance.
  5. Uber restricted communication between passenger and driver to the minimum necessary to perform the trip and took active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride.

Taking those points together, it was clear that the work being performed was very tightly controlled and defined by Uber.

It was designed to ensure that Uber, rather than individual drivers, obtained the benefit of customer loyalty and goodwill.  This contrasts with the usual understanding of self-employment which enables individuals to profit from the success of their venture by reaping the benefits of their hard work and effort.

Conclusion

As this was a Supreme Court decision, Uber now have a definitive ruling that their drivers are workers under UK employment legislation.

As well as facing future claims for holiday pay and the national minimum wage, the judgment may also create tax liabilities and pension liabilities for Uber

The judgment is also important for the wider gig economy. It joins other similar decisions to confirm that the courts should look to protect workers regardless of the contractual documentation they sign.

Where employers use complicated arrangements to disguise the true nature of a working relationship, they will most likely fail.

Employers are advised to review their relationships with self-employed contractors to ascertain the risk of them bringing worker status claims.

 

If you have any queries or issues in relation to employment law please contact Michael Nadin here or by calling on 01604 609560

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