In a much-anticipated judgment, Uber has lost its appeal to the Supreme Court over two issues central to its business model: i) whether its drivers are workers and ii) when they are deemed to be working (and so entitled to be paid at least the minimum wage for their time).
The result is that Uber faces significant liabilities for payments of the national minimum wage (which would be enforced by HMRC), as well as claims for holiday pay and SSP from the drivers. Its drivers will also be protected under whistleblowing law.
The result in this case is not surprising. The Supreme Court has confirmed the decision made by the Employment Tribunal and upheld by both the EAT and Court of Appeal - so every English court which has looked at this case reached the same conclusion. It's also in line with the trend in cases concerning gig economy workers. But the implications of the case go beyond the gig economy, as it clarifies some key aspects of how employment status should be determined.
Uber had argued, on the basis of its contractual documentation, that it was acting as an agent for the drivers and that for each journey there was a contract between the passenger and the driver, not the passenger and Uber. The Court dismissed this argument, despite Uber's detailed documentation seeming to support it. The only entity which held a private hire vehicle operator's license was Uber London, not the individual drivers nor Uber's Dutch entity. It is unlawful to accept a private hire vehicle booking without such a license - and the Court had to assume that Uber intended to operate lawfully. So in reality the contract was between Uber and the passenger, not the driver and the passenger.
Relevance of written contract
The first important point on employment status is about the relevance of the written contract and when courts should look beyond the contract to determine employment status. The answer, according to the Supreme Court, is that the Court can always look beyond the written contract, not just when the contract appears to be inconsistent with the working arrangements.
The Court stated that contract terms which state that the individual acknowledges that they are self-employed have no legal effect. It also commented that courts are entitled to disregard the terms of contracts with third parties (e.g. customers) if they are intended to create an artificial legal relationship between a business and the individuals providing services to it.
This broad approach means that working arrangements will be central in determining employment status.
Indicators of worker status
There were 5 key factors indicating worker status:
- The maximum fare for each journey was set by Uber. Although drivers could in theory agree a lower fare, they would still be charged the same service fee
- The written contract terms were determined by Uber and the drivers had no freedom to negotiate them.
- The drivers did not in reality have a free choice about accepting rides – penalties were imposed on them for not doing so.
- Uber exercised a high degree of control over how the service was delivered (e.g. requiring specified models of car) and through its driver ratings system, which was equivalent to performance management.
- Uber restricted communications between passenger and driver to the bare minimum needed to collect the passenger.
Uber argued that some of the control it exercised was essentially the result of regulatory requirement, rather than its own commercial choice. The Court held that the fact that the control stemmed from regulatory requirements didn't undermine the conclusion that the drivers were workers but in fact bolstered it.
The Court ruled that drivers were working for minimum wage purposes when they were logged into the Uber driver app and within the territory in which they were authorised to accept rides. There was one potential get-out clause for Uber - if a driver were logged on to multiple providers' apps simultaneously and could hold themselves out as available for all those apps, the driver might not be working for Uber at that point. This could well have wider ramifications beyond the gig economy for a wide range of workers engaged in 'on demand' work.
The case confirms yet again that employment status is one of the most contentious areas of employment law - and that apparently clever drafting which seeks to confer self-employed status will be scrutinised carefully by the courts.