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The “gig economy” business model has become increasingly prevalent as businesses can use apps to match customers with casual gig economy workers. The businesses can then take commission from the earnings of the worker without employing them and therefore, without the workers being afforded employment law rights such as minimum wage or holiday pay entitlement. This situation has led to a number of cases in recent years in relation to the employment status of these individuals. None of these have been more high profile than the Uber case in which the Employment Tribunal (“ET”) found that these individuals were not self-employed contractors but rather were workers. This is a decision which has recently been upheld by the Supreme Court.
Uber is a global company which uses an app to connect customers with drivers. The company has grown quickly from its humble beginnings in 2009 and is now a multi-billion-dollar company. In 2016 an ET case was brought by two Uber drivers who claimed that their purported self-employment status put them under “tremendous pressure” to work long hours and accept jobs, adding that there were “repercussions” from the company if they cancelled pickups. They claimed that in some months they earned as little as £5 an hour. Uber contested this and argued that it is a technology firm, not a transport business and that its drivers are independent, self-employed contractors who can choose where and when they work.
The ET was scathing in its assessment of Uber’s arguments, saying: “It is, in our opinion, unreal to deny that Uber is in business as a supplier of transportation services”. In the end the ET found that the drivers were “workers” which is a status somewhere in between employed and self-employed. Workers do not have all of the employment rights of employees but they are entitled to some of them including minimum wage, holiday pay and parental leave.
This was clearly a decision that had the potential to affect Uber’s business model and it was no surprise that the company decided to appeal the judgment. However, after losing in the Court of Appeal, its last chance to overturn the judgment was its appeal to the Supreme Court.
Supreme Court judgment
The Supreme Court took a similar approach to the lower courts and looked behind the wording of the drivers’ contracts to determine whether, despite contractual assertions to the contrary, the drivers fell within the statutory definition of a “worker”. It was emphasised that employment legislation includes important provisions to prevent workers from being paid too little, forced to work too long or forced to other forms of unfair treatment. Given the unequal bargaining power and inherent relationship of subordination, it is important that businesses cannot circumvent these protections by essentially contracting out of statutory rights in an artificial manner.
One of the main reasons why the Supreme Court agreed that the drivers were workers was due to the level of control that Uber exercised over the drivers. The Supreme Court agreed that this was not indicative of self-employment. It was notable that:
The Supreme Court also scrutinised the contractual documentation in detail and concluded that Uber’s position was not that of a mere booking agent. Comparisons were made to booking agents for hotel accommodation and it was found that the situation, while having some similarities, was not analogous. This is because hotel accommodation is not a standardised service. Suppliers set the price and are responsible for defining the level of service they choose to offer. As such the suppliers are properly regarded as carrying on businesses which are independent from the booking platform and are performing their services for the customers, not the platform. The Supreme Court clearly agreed with the lower courts that Uber was more than just a technology platform or booking agent for drivers.
A secondary question which arose from the conclusion that the drivers were workers was: during what periods of time were the drivers working? The ET had found that the drivers were working from the moment they had the Uber app turned on and were willing and able to accept bookings and not only when they were actually driving. The Supreme Court referred to the welcome packet of materials given to new drivers which referred to logging onto the Uber app as “going on duty” and found that the ET was entitled to come to the conclusion that it came to. Therefore, the drivers would be entitled to minimum wage for the periods of time when they were on call. This has raised an interesting issue over what might happen if the driver was logged into multiple apps for transportation providers at the same time which was not considered because at the time there were no other apps available.
The drivers are now entitled to claim minimum wage (including back pay) with this being based on the entire working day rather than only when they had a rider in the cabs. They are also entitled to claim annual leave and all other rights available to workers. This falls short of the right to claim unfair dismissal, redundancy pay and other rights that are available to employees only.
Uber appears to be taking a narrow interpretation of the judgment claiming that it is relevant to a small class of drivers from 2016. It has stated that since then “we have made significant changes to our business, including giving you more control over how much you earn as well as providing new protections like free insurance in case of sickness or injury” and that the judgment does not apply to drivers who earn on the app today.
However, this is a questionable conclusion for Uber to make. Losses in its share value in the immediate aftermath of the judgment suggest that this decision is a major blow for its business model and potentially that of other similar organisations. It is unclear how free insurance changes the position. In fact, if anything the provision of benefits would strengthen a driver’s case that he or she is not self-employed. With tens of thousands of drivers operating in London alone it seems likely that the potential liability could be substantial.
This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Employment team at Cleaver Fulton Rankin for further advice or information.