The Uber Decision: Employment Status in the Gig Economy

Year Published: 2021

Now that the dust has settled after the long-awaited judgment by the Supreme Court in the Uber case which was delivered on 19th February 2021, Jennifer Platt, Senior Associate in our Employment team, reflects on the implications of the decision for individuals and employers.

Key Points of the Supreme Court’s Judgment

The Supreme Court (“SC”) upheld the original decision of the Employment Tribunal (“ET”) and the decision of the Employment Appeal Tribunal (“EAT”) that Uber drivers are ‘workers’ and not independent third-party contractors, which Uber had tried to argue. As a result, Uber drivers are entitled to paid holiday, rest breaks and to be paid at the rate of the National Minimum Wage.

Uber sought to rely on the contractual documentation issued to Uber drivers. However, it was held that the contractual documentation did not reflect the reality of the relationship between the parties, which was one of subordination and dependency.

There were five main reasons for this:

  • Uber sets fares for each ride and drivers are not permitted to set their own prices;
  • Uber sets the terms and conditions for using its service;
  • Drivers face penalties for cancelling or not accepting rides;
  • Uber has significant control over the way that drivers work because they are subject to a rating system. If a driver’s rating falls below a certain level, they face penalties or termination.
  • Uber takes active steps to prevent drivers and passengers from having an agreement with each other outside of the Uber app.

The SC also confirmed the ET’s finding that the drivers’ working time includes all the time they are in the territory in which they are authorised to work, logged into the app and ready and willing to accept work, not just when they are completing a trip.

The SC stated that it was critical to understand that the rights asserted by the drivers were not contractual rights but were created by legislation. The task for the ET was one of statutory interpretation, not contractual interpretation. They held that the interpretation should give effect to the purpose of the legislation, which is to give protection to vulnerable individuals who have little or no say over their pay and working conditions.

Implications on Businesses and Individuals

Clearly there are huge implications for the way Uber operates its business in the UK. Businesses which are run in a similar way will also have decisions to make about their business models.

More broadly, the case is a reminder of the importance of contractual documentation reflecting the reality of how a working relationship operates in practice. When Tribunals are considering statutory rights, they will look behind contractual documentation and make findings of facts about the relationship which, as Uber discovered, will be difficult to challenge in the higher courts.

In my view, employers should be cautious about designating individuals as independent contractors if the relationship involves dependency and subordination, i.e., if individuals are not truly “independent”.

Concluding Thoughts

The Uber decision clearly demonstrates the direction of travel in relation to the protection of those working in the so-called ‘gig economy’. There is likely to be a greater willingness on the part of the Courts and Tribunals to look very closely at the practical realities of working arrangements and be alive to the need to scrutinise well drafted contractual documentation.

Some might say this is long overdue. There are an estimated 5 million people in the UK who work in the gig economy. The increased reliance on those individuals has been highlighted by the COVID-19 pandemic, and perhaps now is the time to ensure that they are receiving the protection intended by legislation.

For more information about employment law matters, please contact Jennifer Platt on 0161 475 7669 or email [email protected].

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