The highly publicised case of Uber v Aslam has now received its final appeal ruling. In a unanimous decision, the Supreme Court has endorsed the Employment Tribunal findings that the claimant drivers should be classified as ‘workers’ rather than self employed. You can read the full Supreme Court judgment here:
Supreme Court Judgment – Uber BV and Others v Aslam and Others
The background of the case – Uber v Aslam
A group of 25 Uber drivers lodged an employment tribunal claim in 2015, arguing that they were ‘workers’ rather than self employed, and therefore entitled to the national minimum wage and to paid leave.
In defending the employment claims, Uber argued that the claimants were not ‘workers’ and therefore were not afforded protection under employment law. Uber stated that the drivers were engaged on a self employed basis: they could drive as much or as little as they want; they could work for other organisations; and they paid their own expenses including taxes and licenses.
The Employment Tribunal upheld the drivers’ claim and found that they should be classified as ‘workers’ with entitlement to all relevant employment rights and protections.
Supreme Court Ruling on Uber v Aslam
Uber appealed to the Supreme Court after losing at the Employment Tribunal and lower appeals courts.
Uber appealed on the grounds that it is merely a technology service provider that acts as a booking and payment collection agent on behalf of the drivers. Uber claimed that when a passenger makes a booking via the Uber app, a contract is created between the driver and the passenger, to which Uber is not a party to. Uber argued that the written contractual agreements should be the starting point when determining employment status, and that the Employment Tribunal had erred in disregarding these documents.
The Supreme Court strongly rejected this view. The court stated that as the drivers were asserting their statutory rights, the question before the court was one of statutory interpretation not contractual interpretation. The court explained that the purpose of the relevant employment legislation is to protect vulnerable workers, and ‘the efficacy of such protection would be seriously undermined’ if employers had the power to determine whether or not the other party is classified as a ‘worker’. The Supreme Court further stated that ‘the wording of the contractual documents, while relevant, is not conclusive’.
The Supreme Court concluded that ‘the service performed [by the drivers]… is very tightly defined and controlled by Uber’, and the drivers are in a position of subordination and dependency. The court emphasised the following findings of the Employment Tribunal as being relevant:
- The contractual terms are dictated by Uber and are non negotiable;
- Passenger fares are determined by Uber, not by the driver;
- Uber monitors the drivers’ rates of acceptance, and the drivers are penalised if their acceptance rate falls below expectations;
- Drivers are not informed of the passenger’s destination until after they have accepted the work. This means that drivers do not have the option of declining certain destinations;
- Uber restricts the type of car used by the driver;
- If the driver’s performance ratings falls too low, they may be subject to a warning process and potential termination;
- Uber restricts communication between the driver and the passenger, and prevents the driver from establishing an ongoing relationship with the passenger;
- The drivers have no way of increasing their earnings other than by working longer hours.
The Supreme Court dismissed Uber’s appeal and held that the Employment Tribunal was entitled to find that the drivers were engaged by Uber as ‘workers’, and were therefore entitled to the relevant employment rights and protections.
Furthermore, the Supreme Court agreed with the Employment Tribunal’s decision that the drivers’ working time was not limited to the time that they spent driving passengers, but covered any period when they had the Uber app switched on, were within the territory in which they were authorised to work and were able and willing to accept assignments. This last point is significant as it means that the drivers are entitled to receive the national minimum wage in the period in which they are waiting for passengers, not just when they are driving passengers.
The Supreme Court also stated that any contractual terms (such as indemnities) which attempt to exclude or limit employment legislation protections will be unenforceable.
What does this ruling mean for Uber?
The judgment was decided upon the specific facts of the case, and therefore applies only to the drivers who brought the claim against Uber. It does not necessarily mean that other Uber drivers would also be classed as ‘workers’. Nevertheless, the judgment sets an important precedent and is likely to encourage further claims against Uber.
Uber have since confirmed that they will pay all their UK drivers a guaranteed minimum wage, holiday pay and pension contributions. However, Uber has committed to paying the minimum wage only from the time at which a journey is booked, not from when the driver is logged into the Uber app and is available for work.
In response to Uber’s announcement, the lead claimants in the case said ‘While we welcome Uber’s decision to finally commit to paying minimum wage, holiday pay and pensions we observe that they have arrived to the table with this offer a day late and a dollar short, literally. The Supreme Court ruled that drivers are to be recognised as workers with entitlements to the minimum wage and holiday pay to accrue on working time from log on to log off, whereas Uber is committing only to these entitlements to accrue from time of trip acceptance to drop off. This means that Uber drivers will be still short-changed to the tune of 40% to 50%.’
What does this ruling mean for the ‘gig economy’?
The Supreme Court’s ruling will be significant for those organisations operating a similar business model, who allocate work on a job-by-job basis on receipt of a customer order. These companies are likely to see increased legal challenge.
The decision comes at a time when there is a lot of talk about the “gig economy”, which is characterised by short term contracts or freelance work, paid on a piece rate basis, and often app based. Companies are relying more and more on irregular and short term assignments to provide a service to their customers, and are looking for self-employed people to carry out this work to keep costs to a minimum. Research by the TUC found that around 5 million were employed in the gig economy in 2019.
The Taylor Review was set up by the Government in 2016 to review whether employment law needs to adapt to keep pace with modern business practices, and in particular atypical forms of working. The Taylor Report recommended the introduction of a new category of worker called a ‘dependent contractor’ with entitlement to basic employment law protections. The Report also recommended that the minimum wages rules on piece work should be adapted to suit app based platforms. To date, these recommendations have not been enacted.
What does this ruling mean for my business?
The Uber v Aslam case illustrates the importance of correctly classifying the employment status of the people that work for you. The Supreme Court judgment has provided some useful guidance in this area:
- Tribunals will look beyond the wording of the contractual agreement when deciding the employment status of an individual. While the contractual agreement is part of the picture, it is not determinative.
- It’s important to regularly review the employment status of the people that work for you, to ensure that the reality of the relationship reflects the contractual agreement. Employment relationships can adapt and change with time.
- The degree of control that Uber held over the drivers was the determining factor in this case. The Supreme Court stated that ‘the greater the extent of such control, the stronger the case for classifying the individual as a ‘worker’ who is employed under a ‘worker’s contract’. Therefore, if you intend to engage self employed staff, it is imperative that you grant them as much as control as possible over the way in which they work.
- The Supreme Court confirmed that any attempts to exclude or limit employment legislation protections (such as contractual indemnities) will be void. Employers are advised to review their contractual documents to ensure that they are not in breach of this ruling.
Our Guide ‘Employment Status – Employed or Self Employed?’ provides an overview of the factors to take into consideration when determining whether someone is a worker, employed or self-employed.
What can we do to help?
If you would like advice on employment status, please contact our team on 0330 223 5253 or office@fitzgeraldhr.co.uk. We would be delighted to help you.
We hope you found this guide useful. You may also find the resources below helpful.
