Supreme Court decision on gig economy workers

Hello, my name’s Paul Griffin and I’m head of the employment and labour team at Norton Rose Fulbright in London. 

You will all have seen the press reports at the end of last week on the Supreme Court decision regarding the Uber drivers and people in the gig economy. Today, I thought that I would explain the ruling and where that leaves us now. The decision is a landmark judgement and is likely to have wide-ranging implications for workers, and providers in the gig economy.

Background

The claim was brought by two drivers, who claimed that they were ‘workers’ within the meaning of S.230(3)(b) of the Employment Rights Act 1996 and the equivalent definitions in the National Minimum Wage Act 1998 and the Working Time Regulations 1998. Uber argued that the drivers are independent contractors and not workers. 

There are three levels of employment status in the UK: self-employed, worker and employee. Self-employed individuals are not entitled to the same employment protections as workers and employees, and so aren’t entitled to protection from unlawful deductions from wages, entitlement to receive the national minimum wage, and entitlement to paid annual leave. Over the past few years there have been a number of cases involving gig economy workers considering the employment status of these workers and, as a result, what employment protections they have.

The Employment Tribunal held that they were workers and not self-employed and as such were entitled to the employment protections. Both the EAT and the Court of Appeal upheld the Employment Tribunal decision. Uber appealed to the Supreme Court as the case had such wide ranging implications of the gig economy in general.

Decision

The Supreme Court unanimously rejected the appeal. There were various reasons put forward.

First, Uber argued that there was no direct contract between Uber London who were the licensed private vehicle operator and the driver. The court argued that, although the driver had a written contractual relationship with Uber BV who were the Dutch based operating company, for regulatory reasons Uber London held the private hire licence. The Court held that when Uber London accepted a booking then, as the holder of the private hire licence under the regulatory requirements  they were acting as principal and so there was a direct contract. The Court then went on to consider one of the key elements relating to the terms of the contract. The  Supreme Court held that it is wrong, in principle, to treat the written agreement as a starting point in deciding whether an individual is a worker.  Previous case law in Autoclenz v Belcher established that in deciding whether a person is a worker, the tribunal had to consider all of the relevant circumstances including the written agreement and whether this truly reflected the way the relationship operated in practice. The Supreme Court went further than this and held that the correct approach is to consider the purpose of the employment legislation. It referred to a previous case which had held that the ultimate question is whether the relevant statutory provisions, construed purposively, were intended to apply to the transaction, viewed realistically.  The relevant employment statutory provisions in this case, are intended to give protection to vulnerable individuals who have little or no say over their pay and working conditions because they are in a subordinate and dependent position in relation to a person or organisation who exercises control over their work. The effect of such protection would be seriously undermined if the putative employer could determine how the person is to be classified, simply by the way that the relationship is characterised in the written contract. The Court additionally relied on the fact that the Employment Rights Act, the National Minimum Wage Act and the Working Time Regulations all contain anti-contracting out provisions. 

So, the Employment Tribunal had been entitled to look at the reality of the working arrangements. In particular concentrating on the element of control which the employer exercised over the individual.  The greater the level of control, the stronger the argument that the individual is a worker.  In particular the Supreme Court considered five findings by the employment tribunal which justified its conclusions:

• Where the ride is booked through the app it is Uber who sets the fare. As such, Uber dictates the level that the driver are paid for the work they do.
• Contract terms are imposed by Uber and the drivers have no say in the terms that are applied.
• Once logged on the drivers choice is constrained by Uber.  So, for example, Uber monitors the number of trip requests that the driver cancels. Uber can take steps to penalise the driver if they refuse too many rides including automatically logging them off from the app.
• Uber exercises control over the way over the drivers provide their service. For example they apply a rating system and, if the driver fails to maintain a certain rating, they can be removed from the app.
• The relationship between the driver and the client is very limited as the communications between the passenger and driver are kept to a minimum so that the driver is prevented from establishing any relationship beyond an individual ride.

Taking these factors together the Court held that the method of transportation services is very tightly defined and controlled by Uber. The drivers are in a position of subordination and dependency in relation to Uber such that they have limited ability to improve their economic position through entrepreneurial skill. They are therefore entitled to the employment protection rights of workers.

Working Time

The Supreme Court also considered the question of what amounts to working time. It held that the Employment Tribunal were correct to hold that time spent by the claimants working is not limited to periods when they are actually driving passengers. It includes the time when the driver is logged on to the app, is within the territory in which he was authorised to use the app and is ready and willing to accept trips. However, the Court did hold that this question should not be answered in the abstract. It had been argued that the driver could not be said to be working at the disposal of Uber if they could also be logged on at the same time to a competitor app. However, the Supreme Court held that at that time no evidence was adduced to show that the workers did log on to other apps. 

There are now certainly a significant number of competitors to Uber and also in the gig economy in general it appears that the individuals will often register with more than one app provider.  If this is the case then it will be interesting to see how in practice this issue of working time is determined when people are signed on to multiple apps.

Consequences of the decision

The claims of these particular claimants will now be considered by the Employment Tribunal to determine the level of compensation. 

This decision will have an impact on all areas of the gig economy. As the drivers are held to be workers then they will have rights to the national minimum wage and rights to receive paid annual leave, although it is important to stress that the decision is dependent on the facts of each particular case, and in particular the level of control which the putative employer has and the subordinate nature of the relationship. 

This is a global issue, the number of gig economy workers around the world has increased significantly in the past couple of years and particularly during the Coronavirus pandemic. 

If you need any advice in relation to this then please do contact us and we will keep you up to date with any further developments.